GOOD MORNING,
Prices are higher across the board to begin the day on a technical correction. The funds remain big grain shorts and near record corn shorts. Chatter is that China may have purchased US corn, and weather is trending warmer and drier next week. Current prices factored in stable ratings which were noted in crop progress tables. Funds purchased 15-20K corn yesterday, which created a nice close, and there is upside follow-through this morning. Funds also purchased 4500 soyoil yesterday which added to oilshare firmness. Meal prices hit a new trading range low of $287.50, with a steady morning tone.
The June Stocks/Acreage report is out at 11:00 Chicago time. The report will make us a whole lot smarter when the numbers are released at 11:00 AM today.
WEATHER
Rains will be needed this week in some areas, namely North Dakota and Ohio, which missed out on most of the precip events last week. The 6/10 day outlook calls for showers through the Delta with adequate moisture levels in most areas of the Midwest. Temps will be above normal next Sat. - Wed.
REPORTS
Crop Progress
Corn: 1% improvement in the G/E category to 73% which was as expected. Ill., Michigan, and Ohio each improved 7-8% while Indiana improved up 5% in the same category. Minor declines were noted in eight of the other states. This is the best good-to-excellent rating since 2011. Iowa and Minn. are standout states. Silking: 4% vs. 2% year ago, and behind the five-year average of 7%
Beans: Good to excellent conditions up by 1% to 71% good/excellent, and the fourth highest rated since 2011. Emergence: 95% as of Sunday, 15% ahead of last year's 80% and ahead of the five-year average of 91%. Blooming: 14%, 3% ahead of the year average of 11%.
Winter Wheat: 41% complete as of Sunday, equal to the five year average. Kansas is 47% harvested vs. 51% average, Ill is 63% vs. 26% week ago
Winter Wheat rated 52% good/excellent, unchanged from week ago.
Stocks/acreage report will make us a whole lot smarter when the numbers are released at 11:00 AM today. THe average guess for 4.95 bln bu of stocks vs. 5.20 bln bu year shows that March-Apr-May were peak virus months with lower ethanol usage, but possibly higher animal feed usage. We shall see in the morning when the numbers are released. Lower June 1 bean stocks may be attributed to the better pace of exports.
ANNOUNCEMENTS
Brazil's Ag Ministry said Chinese customs office moved to temporarily ban meat imports from Brazilian facilities. China banned the import of meat from 3 plants following reports in the Brazilian press about cases of Covid-19 among their workers.
Chinese scientists are monitoring a new flu virus associated with Chinese pigs. Chinese researchers say the hogs studied were over the 2011-2018 period and have a "g4" strain of the H1N1 virus that has "essential hallmarks of candidate pandemic virus".
Chinese price data shows pork prices for the week ending June 24th was up 2.4% vs. the prior week.
DELIVERIES
Soyoil: 2,402
meal: 10
Chicago wheat: 151 JP Morgan put out 151
CALLS
Calls are as follows:
beans: 3-5 higher
meal: 1.20-1.50 higher
soyoil: steady
corn: 3 1/2-4 higher
wheat: 3 1/2-4 higher
OUTSIDE MARKETS
A lower Dow, down 58 pts, with crude oil down to $38.90/barrel and a firmer US dollar up to 97.80.
TECH TALK
- Nov beans remains a sideways trade, holding the $8.55 level with clear tops at $8.80. Prices move back above the 50-day moving average of $8.58 and towards trendline resistance at $8.72. At this point, would continue to straddle or strangle the trading range, as trendline support is stronger at the bottom while resistance is lighter at $8.72.
- Dec. meal posts a new contract low at $287.50 with an inside day of trade today. Prices are firmer though resistance now moves down to $291.00. Target low under $287.50 is $285.00.
- December soyoil reverses out of lower trade under 28c to trade into the 20-day moving average of 2870c. The market closed on its lows but right on the 100-day moving average of 2840c. Would look for possible retracement towards the peak high of 2950c if prices cross into new trading range highs above 2870c.
- Sep. corn recovers nicely from the overall break to $3.15 3/4 to close into $3.28. More short-covering created follow-through once prices drove beyond the 50 day moving average of $3.28, and prices are now above the 20-day moving average of $3.31. Look to test $3.35 into the report. The upside recovery could allow prices to even climb to $3.39, which is the top of the market.
- Sep. wheat now has a series of tops from $4.88-$4.91, so any trade above this line of resistance will trigger buy-stops and a probable trade towards $5.15, which is also the current top end of this market. Since prices closed into this key resistance level, it does increase the chance of taking it out for short-covering activity.
DECEMBER MEAL
Overall direction is lower with a new contract low yesterday at $287.50. New lows beget new lows and there is not a reversal signal to suggest this move down is complete. Target lows under $287.50 are located at trendline support which crosses under the market from $285.00-$286.00 should we go there. There continues to be layers of resistance locked in from double highs of $294.00-$297.00, which are now the top end trading range for this market. Until prices register a good reversal technical signal, the path of least resistance remains down, possibly heading into a $285.00-$298.00 trading range.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America