Overnight markets:

Higher for grains, mixed for oilseeds.

• CBOT wheat up +9.0c to 444.c,
  
• Kansas wheat up +8c to 446c,
• Corn up +7.5c to 384.75c,
• Soybean up +7.25c to 930.25c,
• Winnipeg canola unchanged 509.5$C,
• Matif canola up +1.75€ at 356.75€,
• Dow Jones up +37.46 to 21,173.69,
• Crude Oil down $45.86c,
• AUD up to 0.754c,
• CAD 1.350c (AUDCAD 1.019),
• EUR up to 1.125c (AUDEUR 0.670).

USDA is out on Friday with updated monthly crop production and supply-and-demand (S&D) figures, but the focus in the next five days will be on weather, with hot, dry and windy conditions expected in the US followed by some mild precipitation.

Wheat

US winter wheat closed higher without any help from spring wheat. Minneapolis Grain Exchange (MGE) contracts closed slightly lower on profit taking and an increased moisture forecast over the weekend in spring wheat areas. It’s been a big week for MGE, which traded its largest volume in history on Tuesday, so it’s not surprising it had a breather. The hot spell affecting corn and beans is also there on wheat; short covering was noted as the technical picture picks up and we reach fresh monthly highs. Volatility picked up, closing at 26.5 per cent in July. In demand news, US wheat was the cheapest into a recent Iraq tender at US $265 cost and freight, while the 450,000t Algerian tender was booked at between $197-$199 for August, and is most likely to be based on discounted French replacement values.

Corn

Corn put in an impressive performance, breaking out of its three-month trading range. The hot, dry weather forecast in the northern plains has pushed lower into the corn belt and is driving yield concerns and prices higher. Corn broke a record today trading over one million contracts. The fund shorts met the farmer with significant short covering noted, and a large resistance level cleaned out.

Soybeans

Soybeans closed higher, supported by short covering in seed and meal. Oil was lower, following weakness in palm oil and the energy sector. With the forecast looking dryer and hotter than expected, the market is pricing in some potential yield loss. Nothing has changed the fundamentals to date; we still have a heavy S&D, but when the fund position gets to record shorts, we are bound to see hypersensitive reactions.

Canola

Canola had a quiet session, trading both sides to wind up slightly higher in new crop and unchanged in the old. It’s the first session we have had for a while where the Jul/Nov spread hasn’t had a rapid swing. From a fundamental point of view the concerns remain for Canadian planting and yields in the prairies. While Australian yields and acres look to be reducing in WA as a result of the dry Mar-May period.

Australia

The Aussie weather forecast looks to be improving slightly, with showers off NSW and southern Queensland showing potential to push further inland. While WA has nothing reaching growing regions, moisture is building off the coast, which could push inland. Cash markets in wheat and barley remain well bid.

Source: Lachstock Consulting