Overnight markets:

Stronger for grains and oilseeds, ahead of tomorrow’s USDA report.

• CBOT wheat  up +4.5c to 453.75c,
• Kansas wheat up +7.75c to 453.75c,
• Corn up 1c to 385.75c,
• Soybeans up 7.25c to 938c,
• Winnipeg canola up +3.7$C to 513.2$C,
• Matif canola up +4.25€ to 361.50€.
• The Dow Jones down -39 to 21140,
• Crude Oil down -0.20c to 47.86c,
• AUD up to 0.753c,
• CAD up to 1.351c, (AUDCAD 1.001)
• EUR up to 1.120c (AUDEUR 0.672).

Wheat

Spring wheat was back in the driver’s seat today, leading the charge on wheat closing almost 15 cents higher. Hot dry weather in the Northern plains continuing to add support. Drought ratings out today revealed parts of North and South Dakota as ‘severe’. After an already rough start with lower acres and damaging rains, some areas are already beginning to head, which means the dry forecast will not enable seed development and lead to lower yields. HRW has support as talk of further abandonment gets airtime as the harvest progresses further north. Saudi Arabia have tendered for 770kmt wheat for Aug-Oct delivery, Australia might be in a position to get some of the earlier sales due to the inverse in the Northern Hemisphere. Weekly export sales were in line with expectations on old crop. SRW has no reported quality concerns as the early harvest picks up. Volatility in July contract up again at 27.25% with weather the commanding driver. Forecasts will be watched closely to see if moisture in the Northern plains eventuates. Global concerns remain present with Ukraine and Europe still needing moisture, the concern for Australian dryness is resolvable if adequate moisture is received in the next 6 weeks.

Corn

Corn did well to hold onto yesterday’s gains in another big volume trading day. Open interest has surprisingly increased by 40k in the last two sessions which implies new positions being opened as opposed to pure short covering. The COT report will be an interesting read after Friday’s close. Weather is the driver in corn and we will trade a forecast for the next week. In fact, the true impact on production will not be realized until mid July, so we have a lot of smoke and mirrors to trade in the meantime. Weekly export sales were below market expectations, but above levels required to meet the USDA forecast.

Soybeans

Soybeans rallied on short covering and strength in corn and wheat. The weather concerns driving grains is not necessarily going to affect bean production, but with a record short position its going along for the ride. CONAB revised their Brazilian production up to 113.92 mmt.

Canola

Canola stronger today with new crop the leader supported by strength in Soyoil. July futures are pushing up against their weekly highs, but meeting resistance there. Fundamental concerns are still present in Canada with large losses in seeded areas in the Priaries due to wet weather, while hot dry conditions are affecting germination in Southern parts of Saskatchewan.

Australia

The Aussie weather forecast is basically unchanged with coastal showers in NSW looking to penetrate further inland. While the rest of the country remains dry and thirsty in SA and WA. Cash markets remain supported in wheat and barley. Barley is still working into export markets, but supplies are becoming very hard to find, while wheat export demand is as not as supportive to current pricing as new crop production concerns are.

Source: Lachstock Consulting