Markets

Daily market wire 7 July 2017

Lachstock Consulting, July 7, 2017

Overnight markets:

Stronger for oilseeds, mixed for grains with the dust settling on wheat. 

  • CBOT wheat down -21c to 539c,
  • Kansas wheat down -23c to 546.5c,
  • Corn down -1.5c to 390.5c,
  • Soybean up 4c to 985.75c,
  • Winnipeg Canola up 7.599$C to 518.4$C,
  • Matif canola down -2.25€ to 367.25€.
  • The Dow Jones down -158.12 to 21320.04,
  • Crude Oil up 0.199c to 45.33c,
  • AUD down to 0.758c,
  • CAD up to 1.297c, (AUDCAD 0.983)
  • EUR up to 1.142c (AUDEUR 0.663).

Wheat

Wheat dropped like it was hot, with spring wheat leading the charge. The September Minneapolis (spring wheat) contract closed US50 cents per bushel lower, with another impressive daily range at 66c/bu. USDA report released after the close yesterday had crop condition slipping 3 per cent to 37pc good-to-excellent, but the distribution was not as expected with parts of the Northern Plains actually improving. Soft Red Winter (SRW) and Hard Red Winter (HRW) wheat futures were both lower, with SRW failing to trade through the gap formed earlier in the week. A close through this would suggest that the highs were formed, however last nights failure, suggests some support at these levels. Calendar spreads in SRW Sep/Dec are trading at 5pc of full carry which seems high considering the July/Sep spread is close to full storage, adequate stock levels and fund length concentrated in the Sep contract. Global weather features rainfall in France and the Ukraine, although this is seen as a quality concern as its too late to impact yields.

Corn

Corn close to unchanged, which represents strength considering the wheat selloff. Corn ratings were surprising with the market not expecting the 1pc good-to-excellent improvement that was reported. Appears the market is beginning to price in some of this negative weather and with the short expected to still be present in corn, price action next week could see corn go for a run.

Soybeans

Soybeans closed up, but could not test the 3-month highs. South American grower selling is noted and placing pressure on things. Crop conditions were lower, down 2pc to 64pc good-to-excellent and the weather forecast is still not looking great. There is some rainfall forecast in the northeastern production areas, but it’s not enough at this stage. In addition to short covering, beans had some fundamental to play with, with China making enquiries for August coverage. Beans are getting to a fairly important period both technically and fundamentally. Perhaps its time for row crops to drive things for a while.

Canola

Canola stronger again, pushing through key resistance to test yearly highs. The Prairie conditions are not improving, feeding concerns for yields there. Appears that the market is ignoring the better canola areas, which might provide some rationalisation later on. Though for now, it’s all about The Prairies and the forecast.<

Australia

The Aussie forecast is pretty much unchanged with nothing but patchy light showers in WA and SA, which will not be enough to undo the damage so far. We need 25-50mm in these areas. Cash markets were strong in wheat yesterday, though only a few were willing to step up and take tonnes, given the volatility in Chicago. Getting to a point now where central and southern NSW could use some rainfall, so this is helping drive things on the east coast.

Source: Lachstock Consulting

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