Markets

Daily market wire 7 September 2017

Lachstock Consulting, September 7, 2017

Overnight markets:

Higher for grains, mixed for oilseeds.

  • CBOT wheat up 2.75c to 445.75c,
  • Kansas wheat up 3.75c to 448.75c,
  • Corn up 2.5c to 361c,
  • Soybean up 2.5c to 971c,
  • Winnipeg Canola down -0.100$C to 503.9$C,
  • Matif canola down -0.25€ to 369.75€.
  • The Dow Jones up 54.329 to 21807.64,
  • Crude Oil up US52c to US$49.18,
  • AUD up to 0.799c,
  • CAD down to 1.222c, (AUDCAD 0.977)
  • EUR up to 1.191c (AUDEUR 0.6709).

Wheat

Wheat finished higher in all three classes with spring wheat leading the charge. Deliveries in September Soft Red Winter (SRW) wheat were finally achieved, which put pressure on the nearby market, weakening the futures curve. Implied volatility in Dec SRW went out at 20.25 per cent. Hard Red Winter (HRW) wheat is no longer as competitive on a relative value basis to Russian wheat, after the rally in futures and increases in cash premiums. It is expected to stay supported somewhat though, once new crop planting intentions are considered, plus the fact that Russian logistics will prevent constant FOB price pressure. Global cash prices continue to stabilise, Black Sea prices remain supported by a strengthening ruble, US wheat is running out of aggressive sellers, Australia’s production is set to decline as frost damage and moisture deficits are realised.

Corn

Corn slightly higher, with new demand helping to spur things on. Private export sales of 253,300t were announced to Mexico for new crop. Demand continues to pop up for US corn at the moment, as the cheap South American supplies ease up. The market is expecting a reduction in old and new crop ending stocks in USDA’s report next Tuesday, which will tighten things slightly. Feels like the market has made its lows, factored in all the bad news and is now beginning to look forward to decreased plantings and production in South America.

Soybeans

Soybeans made new weekly highs, but finished US5 cents/bushel from their peak, to post slight gains. There was nothing fresh from a fundamental point of view, the market is still trading potential yield reductions from the USDA’s August forecast, as well as ongoing Chinese demand. There are also expectations that the USDA will lower old and new crop stocks in their September report.

Canola

Canola finished lower again, having endured a lot of sell side pressure in the last 7 sessions, no thanks to a strong Canadian dollar. The jury is still out as far as the Canadian crop’s potential, but the balance sheet is relatively tight if Statistics Canada (Statscan) production estimate is realised, especially considering the low old crop stocks available. Statscan reported end of July stocks at 1.348 million tonnes, which helped to silence talk of larger than expected old crop supplies. It’s interesting that the local and global balance sheet looks to be tightening, however the futures contract is testing technical support. Difficult to see things breaking much further, without a significant production surprise.

Australia

Nothing new for the Aussie forecast, with the lack of moisture an ongoing issue for NSW and QLD. The forecast is not calling for any nearby frost threats, however the damage assessment of recent events continues to appear worst than initially expected. Cash prices have reacted accordingly, with northern feed markets posting impressive gains, as consumers revise production ideas and increase drawing arcs.

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