Overnight markets:

Mostly lower for grains and oilseeds.

• CBOT wheat down 2.5c to 482.5c,
  
• Kansas wheat down 0.25c to 487.25c,
  
• Corn up 3.25c to 381c,
  
• Soybeans down 1.75c to 952.25c,
  
• Winnipeg canola up 2.8$C to 505.7$C,
  
• Matif canola up 3€ to 369€,
  
• Dow Jones up 66.71 to 22092.81,
  
• Crude Oil up 49c to $49.52,
  
• AUD down to 0.792c,
  
• CAD down to 1.264c (AUDCAD 1.001),
  
• EUR down to 1.177c (AUDEUR 0.673).
  

Wheat

Wheat was mixed across the classes, unchanged to slightly lower in winter wheat and slightly higher in spring wheat. The European harvest is nearing completion, with no negative yield surprises. Quality damage in Germany, brought forward by in-crop rain, has led to a lower percentage of high-protein milling wheat, which will create challenges for global high-protein supply and demand. Hot dry prairie conditions are forcing revisions to the Canadian wheat crop, with some calling for a sub 20-million-tonne crop, excluding durum. There is no immediate problem in wheat, except for the uncertainty in Canada, which has some time to resolve. The big picture features abundant stocks in Russia and Europe, with limited nearby demand. If an outside catalyst like a weaker ruble boosts cash prices in Russia, then we should see pressure on global cash pricing. It’s just a question of when the farmer becomes a seller, which we suspect will commence shortly. The wheat Commitment of Traders (COT) report is still net long with the following weekly changes: Soft Red Winter at -39,700 vs. -31,400;  Hard Red Winter +50,700 vs. 63,200, and Spring wheat +6,500 vs. 6,700.

Corn

Corn managed a higher close, which reflects the diversity in potential yield forecasts. Still hard to see corn independently staging a rally, with global stocks in abundance and limited export demand for US corn. On the other hand, we will need a heavy catalyst to see corn break technical support at 380, particularly with the August 12 USDA report looming. The corn COT report revealed significant long liquidation last week, with funds unwinding 32,600, to finish at 13,200 contracts.

Soybeans

Soybeans closed slightly lower after an attempted rally early in the session. The market consensus at the moment is that yields will be in around 47 plus bushels per acre, which is not overly bullish. Crush margins are improving in China, which should encourage a reasonable import program, though we have not yet seen that in the form of large-scale physical demand yet. Current price spreads suggest that new-crop South American acres will favor bean planting over corn in the longer term. The COT had the bean position move from square last week to +7.5 contracts.

Canola

Canola managed a higher close, supported by a weaker Canadian dollar, in a low volume week of trading. Concerns for prairie yields have not been abated, with hot dry weather continuing to create concerns.

Australia

With the exception of Western Australia’s northern grainbelt, and north-west New South Wales, last week saw 25-50 millimeters of rain fall in all of the parched cropping areas of the country. The forecast looks limited for South Australia and eastern states, but promising for WA’s northern cropping areas. These recent events suggest some upside in crop estimates, although it should be a late harvest, considering the late development we will witness. Cash markets were quiet last week, with most of the trade distracted solving the big problems at the Australian Grain Industry Conference in Melbourne.

Source: Lachstock Consulting