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Daily Market Wire 9 August 2018

by Lachstock Consulting, 09 August 2018

Higher for grains and oilseeds.

  • CBOT wheat up 1.75c to 570c,
  • Kansas wheat up 4.75c to 584.25c,
  • Corn up 0.5c to 371.25c,
  • Soybeans up 4.5c to 893.75c,
  • Winnipeg canola up C$8.09 to $510.70,
  • Matif canola up €0.75 to €384
  • Dow Jones down 45.15 to 25583.75,
  • Crude oil down US$2.39 to $66.78 per barrel,
  • AUD up to 0.743c,
  • CAD down to 1.301c (AUDCAD 0.967),
  • EUR up to 1.161c (AUDEUR 0.639).

Wheat

Wheat was fractions higher, with Hard Red Winter (HRW) and spring wheat leading the charge in a low-volume and low-range session ahead of USDA’s World Agricultural Supply and Demand Estimates monthly report due out tomorrow. Matif wheat futures were down €-1.75 to €214.5. Implied volatility in September Soft Red Winter wheat finished at 33.25 per cent. In the Pacific North West, 12pc protein HRW is pricing at levels that should encourage Saudi exports soon, given the current basis offers and rising offer prices in the Baltic regions. Further production cuts were noted in Germany, with one of its co-operatives reducing the forecast size of its crop to 19.2 million tonnes (Mt). Further confirmation of German purchases of Black Sea feed wheat circulated, highlighting the European feedgrain deficit and the relative imbalance to barley and corn. Russian prices continue to strengthen, with growers reluctant sellers due to lower production and quality, as well as a softening ruble. Whispers of export controls in Russia are increasing in frequency, but the market is yet to go limit up without getting officially confirmation. It seems prices will need to keep rising in order for this to happen, and if the past three weeks are anything to go by, this trend should continue. Weather in Canada remains hot and dry but is not expected to be causing significant damage yet. In India, the monsoon has disappointed and, without nearby rainfall, could provide another leg-up for global cereals.

Corn

Corn was fractions higher in a mild low-volume session. Corn is in a technical struggle as it continues to fail to close through 385c in the December contract. We have seen seven sessions crossing this figure, and they have failed to close through it for the last four. This is a classic sign of indecision in the market, and we need some direction via the confirmation of US yields before it will move away. The global market has bullish fundamentals, but there is a huge US crop to harvest, which could create order-flow issues, given that US corn demand won’t be firing on all cylinders until we get through the smaller crops that come off elsewhere in the world.

Soybeans

Beans finished slightly higher in a low-range, low-volume session that saw limited new money enthusiasm ahead of Friday’s USDA report, and continuing global trade uncertainty. Soybean futures on China’s Dalian exchange leapt 3pc higher on Wednesday as the local market begins to price in an eventual shortage once reserves are depleted later in the year. Soymeal was up $4.40 per tonne to $337.10, while soy oil was down 14 points.

Canola

Canola was sharply higher in Winnipeg and fractions higher in Matif as dry hot conditions in Canada force shorts to rethink their generous crop estimates. With Matif running away like it has in the past six weeks, there is a lot of good faith put on an ideal Canadian crop, and money flows have responded accordingly. Any threats to this could be met with sharp price corrections.

Australia

Aussie markets were well supported yesterday, defying weakness in Chicago Board of Trade futures as eastern consumers focus on the dry soils they are staring at. The Aussie market is definitely in “buy the dips” mode and every time we make a new high, the more support we get on retracements lower. The balance sheet is tight enough now that the only relief we will see for price is by killing demand or finding supply, and neither are occurring at present.

 

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