Markets

Daily market wire 8 August 2017

Lachstock Consulting, August 8, 2017

Overnight markets:

Higher for grains and oilseeds.

  • CBOT wheat up 8.25c to 490.75c,
  • Kansas wheat up 7.25c to 494.5c,
  • Corn up 5.75c to 386.75c,
  • Soybeans up 11.75c to 964c,
  • Winnipeg canola up 2.7$C to 500.3$C,
  • Matif canola down 0.5€ to 368.5€,
  • Dow Jones up 25.60 to 22118.42,
  • Crude Oil down 28c to $49.30c,
  • AUD down to 0.791c,
  • CAD up to 1.267c, (AUDCAD 1.002),
  • EUR up to 1.179c (AUDEUR 0.670).

Wheat

Wheat closed stronger across all classes, with Spring wheat leading the charge; it was up 10 cents, closing near its highs. Implied volatility in the Sep Soft Red Winter contrat went out at 23.25 per cent. The bleeding in global cash prices has stemmed somewhat, with Russian pricing holding up after selling off US$4-5 last week. The market ran out of sellers today, and with no major fundamental changes, the fact that we have done a lot of work to the downside helped consolidate things. Global weather features more hot and dry conditions in Canada, while Northern Europe is still receiving unwanted rainfall that is affecting harvest quality. European yields are coming in better than expected, with the French Ag Ministry recently revising their wheat crop up 600,000 tonnes. It feels like the world is running out of potential supply problems in wheat, so now it is up to consumers to engage and set a floor in the market. This may come closer than we think, with Iraq recently purchasing 50,000t of Aussie wheat, Bangladesh making inquiries, and Jordan recently tendering. Spring wheat ratings increased 1pc after the close, which may surprise some of the bulls.

Corn

Corn couldn’t find any sellers below 380 support in the Dec contract, which helped to prompt the minor rally. Corn is benign at the moment, with heavy fundamentals and limited fresh drivers to force its hand in either direction. A yield surprise from the USDA on 11 August may spark something, but for now it’s reluctant to make big moves either way. Crop conditions were down 1pc at 60pc good to excellent.

Soybeans

Beans came out firing as the 10-day weather forecast suggested hot dry temperatures in Iowa and some parts of Illinois. Crop conditions improved, up 1pc to 60pc good to excellent. Talk of congestion in Chinese ports and large-volume resales is raising concerns for the longer-term outlook for Chinese bean imports. If we also consider the recent political tough talk on Chinese US import policy, then it’s easy to paint a bearish supply story.

Australia

The Aussie forecast features nothing significant for eastern states or South Australia, but Western Australia is set to receive very welcome rainfall across the board, most importantly in its moisture-starved northern cropping regions.  Northern Kwinana and Southern Geraldton have 50-100 millimetres pencilled in, and it will be very interesting to see if this eventuates and what it means for crops there. Cash markets look to have found a bottom in the near term, with some consumer and export inquiry kicking about.

 

Source: Lachstock Consulting

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