World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Wheat Whets the Market

THE OPEN

November beans:  4 3/4 lower

December meal:  1.40 lower

December soyoil:  9 lower

December corn:  1 3/4 lower

September wheat:  4 1/2 higher

The markets were mixed today but spread activity was apparent as former buy bean/sell wheat trade reversed itself.  The wheat rally became the feature of the day against all other lower markets.  The soy complex continued to retreat but corn values gained a bit of strength from wheat spillover.  

SOY

  • The soy complex retreated today as traders locked in profits after December soyoil hit double highs at 2960c, though meal prices traded both sides of even.   December meal back-tracked to the 100-day moving average of $300.60, which held as more pricing activity set in given the recent surge to new highs for this market.  
  • Traders spent the day selling oilshare with September trading down to 32.48%.  December meal saw more pricing activity as the chart held the 100-day moving average at $300.60 on a pullback.  
  • Consumers were raising their pricing ideas after the rally post the 30 June report, which held recent advances mostly in check.   November beans walked prices back to the $9.00 level moving into congestion trade after the post 30 June vertical advance upwards.  
  • Spreads were slightly relaxed for beans with August/ Nov trading back out to 5 3/4c, as the farmer's target level was hit which provided more supply into the pipeline.  Trade seemed heavy as more selling was noted for soyoil which continued to weigh on November beans, with price action leaking slowly downward into noontime.  

GRAINS

  • The wheat market took off to the upside on fund short-covering as technical price action turned more positive and production levels globally were forecast to drop.  French, Ukraine, and Russian wheat have all had lower production numbers lately, but the largest drop comes from France.  
  • Technically, Sep wheat had been forming a more friendly chart pattern in the form of an ascending triangle, suggesting strongly that the path of least resistance would be higher.  Sep. wheat found buy-stops over 5.06 to trigger trade towards the highest end of recent ranges at $5.12 and more.  
  • December corn prices worked to maintain a steady trade over $3.50 and found more scale down pricing interest on weakness.  Like wheat, given the latest strength, pullbacks were opportunities to cover a short or to try the long side of both markets.   On the negative side for wheat is that recent biz was awarded to Russia, meaning that a further rally in wheat will continue to hinder export biz.   
  • Spreads were firmer with Sep/Dec corn narrowing into 8c from 9c while Sep/Dec wheat traded into 5 1/4c from 7c.  
  • The EIA report showed production added 1.5% to a 915K bb/day rate, which would utilize 4.9 bln bu of corn.  Ethanol stocks built for the first time in 10 weeks, which added 2.3% WOK, forecast at 866 mln gallons.   

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                     HI                            LO

November beans:  3 lower       9.02 1/4                  8.95

December meal:  .30 higher     304.60                    300.60

December soyoil:  37 lower      2960                      2905

December corn:  3/4 lower       3.54 1/2                 3.47 1/2

September wheat:  14 higher   5.14                       4.94 3/4

November canola:  .40 lower    482.00                   478.80                

OUTSIDE MARKETS

Stocks were up 44 pts in early trade trading only slightly higher by midday up 20 pts.  

CLOSING COMMENTS

Weather maps will provide some temporary relief, but there is plenty of summer to move through.  A big report is also on the way which may provide a bit more bearish than bullish fodder for beans and wheat.   For today, all negatives in wheat were ignored as shorts scrambled to get out of the market, if only on a technical basis.  Seasonally wheat tends to post a low this time of trade, and around 60% of harvest is now done.  News of falling production globally in three major growing regions was enough to move weaker shorts out of the wheat.  

The markets are backing away from chief objectives which were attained, namely $9.00 Nov beans, and $3.60 Dec corn.  Farmer selling advanced as prices improved.  For now, it may be just enough to keep prices in trading ranges but cannot rule out another run at recent highs if 1. the weather turns hot and dry and   2. if the July 10 report is not as bearish as some expect.  

Funds are more balanced holding twice as much of a corn short as compared to a bean long.  Look for prices to head locked and loaded into sideways congestion trade, taking into account that the vertical advances for meal, corn, and beans presented a seling opportunity, while overbot extremes could present good buying opportunities given the need to keep some weather premium penciled into the marketplace.

 

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