Prices were mixed to begin the PM session but turned higher by the morning. The markets continue to digest all the yield guesses while continuing to look for signs of export activity. China has been around the corn and bean markets with a bean business announcement yesterday, but we need to see much more to counter what now appears to be fairly benign weather. Interesting that China’s National Development and Reform Commission today said they would reserve commodities in a timely and targeted manner in lieu of recent flooding and a resurgence of Covid-19.
As to global flows, port officials at Argentina’s Bahia Blanca port operations say they have started to resume after truckers ended their strike action yesterday. Another work stoppage is possible again if trucker demands are not met.
Beans: IHS Markit group estimates the US 2021 bean crop at 4,464 mln bu vs. USDA at 4,405 with yield at 51.5 bpa. Benign weather and an improvement in ratings could be negative now appearing to cap off a rally. Processor bids for beans are also trending weaker as crushers take more down-time. Beans may continue to grind either side of $13.50.
Corn: IHS Markit estimates the 2021 corn crop at 14,911 mn bu vs. USDA at 15,165 mln bu and yields at 176.5 bpa. Rumors of Chinese business continue, with traders wondering how much corn they will buy. Flooding could now have an impact on corn crops and the need to import for their reserves. China announced plans to encourage pig farmers to increase the country’s sow herd to around 43 million head by 2025. Prices continue to grind back and forth with December either side of $5.50. The spreads are congesting, but spread strength seems to give way to softer price action.
Wheat continues to carve out a trading range with global losses in Canada. IHS Market estimated the US spring wheat crop at 1,730 mln bu vs. USDA at 1,746 mln bu and 1.826 mln bu yr ago. IGC expects the 21/22 global wheat crop production to reach a record level, with USDA July’s estimate at 792.4 mmt, down 2.0 mmt from June. IGC trimmed its latest forecasts by around 1.0 mmt to 788 mt.
WEATHER – Scattered rains are forecast to cross portions of the Midwest next week. GFS models showed wetter conditions from south-central to eastern Iowa, and NW Illinois as well as in Michigan Saturday into Monday. Rains may occur in parts of Kansas and across the Saskatchewan prairies in the form of 2″ precip, maybe too late for now. Sunday late into Tuesday next week offers the most change. Weak weather systems and some systems from the north could trigger better rains.
ANNOUNCEMENTS
Argentina’s BA Exchange reported leaf damage and developmental delays due to the cold front that came through in July.
Brazil estimated their corn exports at 17 mmt, down 11 mmt from the USDA and down 18 mmt from yr ago.
Calls are as follows:
beans: 5-7 higher
meal: 1.20-1.50 higher
soyoil: 45-55 higher
corn: 1/2-1 higher
wheat: 3-5 higher
Outside markets see a firmer crude oil trade up to $70.18/barrel, with the US dollar firmer to 92.42. Stocks are up 20 pts.
Tech talk: November bean prices trade in a sideways pattern, but it now appears as though $13.20/$13.25 will be a springboard for firmer trade past $13.50. Prices trade into the 100 day moving average of $13.35 which is positive, and top of the downtrend channel or key resistance is $13.45. No reason why prices cannot go there as the ability to congest and trade over strong moving averages speaks to strength, at least for today. December meal price action identifies the $350.00 level as value once again, challenging lows there but holding. The $348.00 to $350.00 area has been in place as a reliable bottom now since late June. Recovery this week verifies Dec. meal in a $350.00-$375.00 range. December soyoil prices test the 6055-6060c level and it holds for higher trade. Though prices tested trading range lows, price action is once again turning sideways keeping the 6050c to 66c range intact.
December corn prices sit atop the 100 day moving average of $5.42, and trades in a confined space from $5.40 – $5.65. It could be that the August 12 report will be the item to kick this market out of its compact comfort range. Would note that Dec. corn ADX trend has fallen to 8, (anything under 25 is weak trend), which shows the small rangebound trade and lack of trend. Would say a push through the 100 day moving average for any reason would trigger more fund selling. December wheat set its high at $7.45 this week due to strength over the $7.00 level. The chart pattern now appears to be what could be a congestive bull flag pattern, which is friendly and would not sell this pattern until prices break below $7.12, which would negate it. The top has yet to be set here.
NOVEMBER BEANS: The overall trading range remains sideways, with prices trading from $13.00 to $13.90, with pivot levels around $13.50. With lower price action comes uncertainty, and a new down-trend channel has formed. Would look for prices to now follow the down-trend channel which is currently directing traffic. A trade back over the visual down-trend channel in blue would trigger more buying. Could continue to straddle/strangle this market as its path is rangebound. The 100 day moving average is located today at $13.35, and prices are congesting around it. Based on that, we could be targeting the next resistance at $13.45.
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