Daily market wire 7 June 2017

Lachstock Consulting June 7, 2017

Overnight markets:

Higher for grains, mixed for oilseeds.

  • CBOT wheat up +6.25c to 440c,,
  • Kansas wheat up +8c to 438c,
  • Corn up +4.25c to 377.25c,
  • Soybean up +1.5c to 923.5c,
  • Winnipeg canola down -0.20$C to 509.5$C,
  • Matif canola up +2€ at 355€,
  • Dow Jones down -47.81 to 21,136.23,
  • Crude Oil up +0.79c to 48.19c,,
  • AUD up to 0.750c,
  • CAD 1.345c (AUDCAD 1.009),
  • EUR up to 1.127c (AUDEUR 0.665).


Wheat traded stronger out of the blocks, led by Spring Wheat contracts.The decline in spring wheat acres after yesterday’s close encouraged active buying. On top of this, we have a forecast of hot and dry conditions in the northern plains and parts of the southern Canadian prairies. Hard Red Winter (HRW) is catching bids with concerns over additional acreage abandonment in South Dakota, Colorado and Oklahoma. The reduction in Spring wheat production and the corresponding price spread to HRW should see some African import markets switch into HRW and other lower-protein wheats; this should ignite some demand and an overall supportive protein wheat picture. It should be supportive of Australian old and new-crop H2, which has struggled to find reasonable buying support this year. Global weather features ongoing dry conditions in the Ukraine, while Russia has no immediate issues. The inverse in Russian wheat is approximately US$15, with no weather story in new-crop, which is just around the corner. 


Corn closed higher, supported by a stronger wheat market. The same concerns continue to circulate in corn, with talk of lower area due to inaccessibly wet paddocks during seeding, and now the threat of hot, dry conditions in Dakota and the eastern corn belt. The fact remains that farm supplies continue to cap rallies, so corn has a lot of resistance to break if it is to get out of its cumbersome range.


Soybeans were quiet, with limited fundamental inputs. The overall story is unchanged so the market is flat. With a record COT position and most bearish information priced in, it’s difficult for new shorts to rush in, and the well-supplied balance sheet is not encouraging buyers to rush in either. A weather catalyst or demand surprise is the next likely driver of bean pricing.


The canola inverse continues to surprise, with the July contract down slightly, while November posted a strong rally. Concerns over planting delays and hot dry weather conditions are the drivers of new-crop strength.


The Aussie forecast appears unchanged, with some coastal showers off NSW and southern Queensland showing some potential to reach further inland, though nothing is overly promising. The clock is ticking on WA and SA, where conditions are deteriorating with declining moisture. Australian old-crop pricing in wheat is finding support from increased new-crop drought risk, export demand for Q4 and what feels like an overestimated balance sheet. The AUD has reach 0.75US cents, which would have weighed on prices one month ago; however, this may not be the case in today’s market, with farmer tonnage harder to find.


Source: Lachstock Consulting


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