Morning Highlights


Highlights

  • Harvey makes landfall again, this time on the Louisiana coastline, as it continues to threaten refining capacity.

  • Energy markets are mixed with Nymex crude oil down 30 cents, RBOB and heating oil trade higher. The US$ is stronger.

  • First Notice Day for September futures is tomorrow, August 31st.  All long positions will be reported after the close today.

Corn

  • The corn market trades fractionally mixed overnight, holding above yesterday’s contract lows, in slightly oversold conditions.

  • Weather threats(frost) remain limited with many eyeing the full moon on Sep 6 as the first concern. Meanwhile, warmer temps help push the crop toward maturity.

  • Farmer selling remains limited, but seeing some signs of “give-up” selling, as they make space for the new crop.

  • Ukraine’s weather center is reporting that dry conditions in August may have reduced their crop 10% to 15%. Current USDA estimate is 28.5mmt vs 28mmt in 16/17.

  • Large spec funds continue to add to their short position, which is now estimated at a net short of 108,800 contracts.

  • CU/CZ trades an overnight range of 15 * 15 ¼ cent carry. CZ/CH within a 12 ¾ * 13 cent carry and CZ17/CZ18 trades at 41 ½ cent carry.

Outlook: Fractional trade as the market flirts with contract lows

Soybeans

  • Soybeans also trade in a relatively narrow range overnight, within yesterday’s price range, and little fresh news to impact price direction.

  • US weather remains mostly nonthreatening as warmer temps aid development this week. Frost is likely the last major event to possibly impact the soybean crop, with next week’s full moon a focal point.

  • Seeing some light oil/meal spreading overnight as soymeal consolidates at the lower end of its trading range.

  • Demand remains strong from China, though the world is well supplied with beans. US domestic processor demand is also strong and light farmer selling keeps crusher basis firm.

  • Technically SX appears to have run into resistance at $9.50, and without any threat to the standing crop, futures could make a run to test the June lows.

  • SX/SF trades at a 9 ¼ cent carry while SX/SN trades at a 33 ¾ cent carry.

Outlook:  Mostly steady markets and harvest of a record crop is closing in fast

Wheat

  • The wheat markets trade higher overnight as they struggle to make a short covering bounce out of contract lows in the SRW and HRW markets.

  • Egypt’s GASC tender was sold by Russia and Ukraine as a depressed nearby US futures market still doesn’t seem to buy much demand.

  • Early seeding is expected on HRW soon after the Labor Day Holiday.

  • Large carries in the winter wheat markets keep cash wheat in storage.

  • The MGEx premium over KC and Chicago slowly erodes with the MWZ/KWZ currently at a $2.36 cent premium over KC.

  • HRS harvest goes strong this week. As combines get into the later maturing crop, most yields have increased while protein levels have dropped. Many traders still talk about harvested acres, but as harvest moves forward amidst larger yields, total production may not drop as much as many think.

  • Stats Canada will release an updated production estimate tomorrow. Average trade guess is production at 26.2mmt. This compares to 31.7mmt last year.

Outlook: Trading a couple higher as you can’t see new contract lows – everyday - forever