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Daily market wire 9 August 2017

by Lachstock Consulting, 09 August 2017

Overnight markets:

Lower for grains and higher for oilseeds.

  • CBOT wheat down -6.75c to 484c,
  • Kansas wheat down -6.75c to 487.75c,
  • Corn down -3c to 383.75c,
  • Soybean up 3c to 967c,
  • Winnipeg Canola up 5.40$C to 511.1$C,
  • Matif canola up 3€ to 371.5€.
  • The Dow Jones down -33.07 to 22085.34,
  • Crude Oil down -0.25c to 49.14c,
  • AUD down to 0.791c,
  • CAD down to 1.266c, (AUDCAD 1.002)
  • EUR down to 1.175c (AUDEUR 0.673).

Wheat

Winter wheats could not sustain yesterday’s gains, while spring wheat advanced US 4 cents/bushel (c/bu). Soft Red Winter (SRW) wheat futures started stronger trying moving to 5 c/bu higher on follow-through buying from yesterday, but reality set in when the buying ran out and the decline began. Implied volume went out at 22.5 per cent (pc). The big weight on CBOT at the moment is European and Russian wheat. Matif made new contract lows which threatened to prompt further declines in global cash prices. Russian low protein prices were also softer, so we need to see demand to prompt a turnaround in the short term. Canada remains a concern, but that is more of a spring wheat story for now and time is on our side.

Corn

Corn futures were sold off slightly.  Corn is the favourable commodity for the short leg of intermarket spreads at the moment. And why not?  It doesn’t have much of a story to get excited about. Global and US stocks are heavy and demand is not creating any huge surprises. It will still find technical support around 380 c/bu, but once the USDA US crop production report and world agricultural supply and demand estimates (WASDE) report, on Thursday August 10th, are out of the way.  Pending no major yield surprises, we expect corn to slowly grind lower.

Soybeans

Soybeans managed to close slightly higher in a quiet session, which only featured a 10 c/bu range, with traders reluctant to make a large move either way ahead of the USDA reports. The market could not wholeheartedly follow through on the dryness concerns for Iowa and parts of Illinois which helped drive things yesterday, given that the temperatures are cooling off somewhat. Chinese soybean imports for July set a new record up 17pc year on year, whilst this is an impressive figure it is also contributing to the port congestion and talk of longer term demand reduction. We did hear similar things in May.

Canola

Canola posted an impressive rally, catching up with US markets after being offline for Monday’s rally due to a national holiday. The Canadian crop is probably not pricing in enough risk premium for the moment, given the ongoing issues in the Prairies and some disappointing early yield reports.

Australia

The Aussie forecast is pretty much unchanged on yesterday, with excellent looking rainfall forecast for most of WA, including the northern wheat belt. Last week’s rainfall combined with the WA forecast is keeping a lid on new crop pricing, allowing the trade to consider a greater-than-22Mt crop versus a less-than-20Mt crop. The new crop wheat price basis is still strong in NSW, supported by strength in the northern feed market and the low production forecast for North West NSW.

Source: Lachstock Consulting

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