Daily Market Wire 12 September 2018

Lachstock Consulting, September 12, 2018

Lower for grains and oilseeds. 

  • CBOT wheat down 9.5c to 518.75c,
  • Kansas wheat down 8c to 522.75c,
  • Corn down 0.5c to 366.75c,
  • Soybeans down 13.5c to 831.75c,
  • Winnipeg canola down C$3.09 to $493.6,
  • Matif canola down €2.75 to €372,
  • Dow Jones up 113.99 to 25971.06,
  • Crude oil up US$2.36c to $69.91 per barrel,
  • AUD up to 0.711c,
  • CAD down to 1.305c (AUDCAD 0.929),
  • EUR up to 1.159c (AUDEUR 0.613).


Wheat futures gave back a good chunk of yesterday’s gains ahead of the next USDA report. Implied volatility in Dec Soft Red Winter wheat finished at 25.37 per cent. Matif wheat was down €0.75 per tonne to €201.25/t, and Russian cash values were slightly lower. Paper longs in Russia continued to sell out, with concerns of any export tax later in the year and a lower currency making it a high-risk place to own grain. The appearance of rainfall in the forecast for southwest Russia did not help. The problem in Russia is the pace at which it’s grain is being exported, and if we continue on this trajectory, we could see 4.2-4.5 million tonnes (Mt) of exports in September, which would suggest figures close to 25Mt by late December. This is the level at which the government continues to suggest intervention. With US wheat persistently running away from export parity due to attractive storage revenue, it’s hard to see a situation where Russian pace does not continue as is.


Corn finished fractions lower in a light-volume session, following wheat and beans as it awaited further direction on yield from the USDA. Weekly crop conditions showed a 1pc improvement, coming in at 68pc good to excellent. Brazil’s CONAB revised the Brazilian crop forecast down to 81.4Mt , compared with the USDA’s 83Mt figure.


Beans were under pressure ahead of the USDA report, with limited concern for US yields and ongoing demand issues. Crop conditions showed a 2pc weekly improvement, coming in at 68pc good to excellent. An export sale cancellation of 192,000t to an unknown party was another softener of demand. Soymeal dropped $2.50/t and soy oil fell 28 points.


The Aussie forecast remains limited for the next eight days, with temperatures heating up and winds increasing, which will be doing damage to moisture-starved crops. The Bureau of Meteorology has called a 50pc chance of an El Nino developing in late spring, which sounds arbitrary on its own, but in the BoM’s words, is “double the normal chance”. Prices remained steady to a touch higher, with the market lacking direction with liquidity easing as harvest nears.

Source: Lachstock Consulting


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