THE OPEN:
July beans: 27 higher
July meal: 5.40 higher
July soyoil; 97 higher
July corn: 20 3/4 higher
July wheat: 18 1/2 higher
The board opened into a strong start with many markets across the spectrum in the green, including crude oil, which is typically a barometer of direction for other commodity prices. Prices are once again in technical trade, with what appeared to be across-the-board buying interest for most stocks/commodities. A new hot and dry forecast was the catalyst for firmer trade, as the weather premium, robbed last week, was dialed back into the marketplace.
At 10:00 export inspections were released as follows:
beans: 192,221 tmt (vs. an expected 245,000 tmt )
wheat: 256,496 tmt (vs. an expected 437,500 tmt)
corn: 2,049,217 tmt (vs. an expected 1,750,000 tmt)
Inspections were neutral for beans and wheat, but over the expected for corn. Corn inspections are up over 850,000 tons from yr ago, with the largest destination to China, totaling over 1 mln tons for the week. Other corn destinations were traditional to Japan and Mexico.
SOY
The major feature in the soy complex was that of higher oilshare as traders once again bot soyoil/sold meal. August oilshare trades to 44.45% with crush trading up to 79.13c/bu. Technical buying in July soyoil ignited a rally over over 68c from 65c, confirming this as a likely trading range. July meal prices bump up against $406.00, but at midday are quickly losing pace with a turn back under $400.00. Cash meal remains weak and prices in July meal return to major support at $396.00. Tough to buy this market for the long run given the inability to hold a rally. Bean spreads are weaker as exports remain quiet and July open interest has to be turned over. July/Nov bean spread falls to 1.50 1/4c inverse from highs at 1.59c. July/Dec meal trades from $3.30 inverse to .50c carry. July bean prices confirm its trading range towards $15.80 but trends back towards key support at midday following weaker meal trade. November beans enter into a confirmed and likely $13.65 -$14.20 sideways push. The strong biofuels push keeps July soyoil futures well supported and sharply higher for the day. At midday, the soy complex is drifting towards the middle of the range, but values are still well into the positive, particularly for beans and soyoil which seem to trade in lock-step with one another.
GRAINS
Corn prices were higher as more technical buying continued after the opening along with strong demand numbers and lower Safrinha crop production estimates. Brazil’s AgRural lowered their production forecast for the country’s second corn crop to 60 mln tonnes, a 5 mln tonne reduction from the May forecast, and a 17 mln tonne reduction from the initial projections. As to yields, AgRural predicted that farmers’ would harfest 77.5 60-kg bags/hectare, the lowest for the center-south since 2016. Mato Grosso’s corn production also had some degree of crop failure, the news-wire stated, but not to the degree of other areas. Brazil’s drought is forecast to be the worst in 91 years. Brazil’s other agency, DERAL, noted that the second season harvest had started with 1% complete, vs. 2% yr ago. July corn prices near the $7.00 level where more selling interest and profit-taking capped off an excellent rally. December corn prices traded to key resistance at $5.85, suggesting that $5.45 to $5.50 will indeed become the new low for a likely $5.50-$5.95 trading range. THe July /Dec corn inverse continued in mixed trade from 1.13 3/4c highs to 1.03 1/4c lows. Sep/Dec inverse traded from a high of 30c down to 25c. Wheat prices remained well supported as new buying was noted on a neutral fund position and a firmer trade in neighboring markets. July wheat prices traded back over minor resistance at $6.90 which sends prices back into key resistance from $7.00 to $7.10. Some bears may want to sell this rally, as inherently this market is not as strong as the others. In its latest forecast, the International Grains Council, (IGC), forecast a modest rise in wheat stocks for 21/22. July wheat/corn trades from 16c to even. July /Dec wheat trades from 91 /4c from 11 1/2c carry.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
July beans: 21 higher 15.78 1/2 15.37 1/4
July meal: 4.00 higher 406.90 396.00
July soyoil: 154 pts higher 68.19 65.85
July corn: 30 1/2 higher 6.96 3/4 6.60 3/4
July wheat: 31 higher 7.02 6.72
Nov. canola: $16.00 higher 744.00 715.30
OUTSIDE MARKETS
Stocks were up over 300 pts at the open and at midday prices are still in the green but only up 90 pts. Crude oil prices continue to trend higher twoards the $70/barrel mark. The US dollar weakens to 89.66 as traders once again buy energies/sell the US currency.
CLOSING COMMENTS
The markets remain strong as the focus will return again to tight carry-out numbers and demand, coupled with forecasts for hotter and drier weather in the 6/10 and 8/14 day outlook. Places that did not receive ample rainfall may struggle, with the northern plains outlook very dry. Corn continues to receive bullish input as the situation in Brazil is more dire as the Safrinha crop continues to drop in terms of production. Lower corn competition from Brazil this fall will have to be made up somewhere, and that implies a return to the US for business. September corn prices remain discounted vs. July, and though most of the open interest flows into December it could make this contract extremely interesting come fall.
Crop progress numbers will be out tonight along with the first condition ratings for corn, which is sure to take the spotlight. Advertised expectations are for corn conditions to come in at 70% good/excellent, which would be close to conditions yr ago and the five-year average, and over the 59% level in 2019. Advertised winter wheat ratings are at 48% good/excellent, slightly higher. On a cautionary note for the bull, a quick planting pace so far and reports that crops are off to a good start could promote turn-around Wed. We will see.
This has been a good rebound and a rejection of wash-out lows last week that are probably too low for the fundamental picture. Technically this is a strong direction in trade, and that could lead to higher values still. Farmers are likely holding for better values, having seen these prices before.
Ranges given the jump in prices:
July beans: $15.25 to $15.90/$16.00, prefer to own
Nov beans: major support returns to $13.50/$13.60
July meal: $395.00 to $420.00, prices remain weak vs. other markets, but if values hold at $395.00 it will return as key support again
July soyoil: 65c-68c or higher, would own pullbacks for a test of 69c to 70c
July corn: $6.45 to $6.50 returns as a possible low for a $6.50 – $7.00 trading range.
Dec corn: $5.45/$5.50 returns as a possible low for a $5.45 to $5.95 trading range
July wheat: $6.75 to $7.20, but rallies here may continue to fail. If long, may want to book it and keep the rest in case prices can stay on the up and up, or sell against $7.00 with a very tight stop.
For the day, think the highs and lows are in.
FYI DEPARTMENT:
JBS’s 5 largest US beef plants, which combined handles 22,500 cattle a day, has halted meat processing, as the world’s largest meat processing company falls victim to a cyber attack that shuts down production around the world, including Australia.
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