GOOD MORNING,

Prices are mixed this morning.  Wheat is lower as traders unwind recent buy wheat/sell corn trade.  Wheat is under pressure in spillover from lower Russian wheat prices, which fell on the back of harvest pressure and the weakening of the ruble against the US dollar.  Russia's IKAR raised its forecast for the 2020 wheat crop to 79.5 mmt from 78 mmt, which is also weighing on prices.      Corn prices are firmer this AM as the commitment-of-trader's report found there was a mix of new buyers and old sellers participating in the market as it heads to recent lows.  

Feature of the morning is soyoil, which has traded into new market highs.   Traders continue to buy soyoil/sell meal.   As has been the pattern, beans follow stronger soyoil prices.  Beans are supported this morning by the firm demand for soyoil for US biodiesel production, with the EIA forecasting volumes of soyoil for biodiesel in May at 778 mln lbs, up from 672 mln in April.   Technically, beans continue to build on last week's reversal from trading range lows.  

The June NOPA soy crush report will be released at 2:00 PM central time.  Advertised expectations are for crush to be 5.33 mmt vs. 5.386 mmt in May.  Soyoil ending stocks are forecast at 2.335 bln lbs vs. 2.446 bln lbs mo ago.  

WEATHER

Cooler than normal temperatures continue across parts of the Midwest.  Lows in North Dakota were in the 40s, with the northwestern Corn Belt in the 50's.  US weekly rainfall was greatest in central and eastern Midwest with areas from Mo. to Michigan reporting rain.  Several areas in Mo, southern Ill, southern Ind., and western Kentucky and Ohio received 2-3".

Two weeks forecast:  Favorable over the next two weeks, with the second week expected to trend a little warmer and drier.  Net drying expected for the second and third week of August for many areas in the Midwest, despite some periodic showers due to warmer temps and more sporadic rainfall.  Iowa will have the opportunity for period rainfall, but resulting amounts are probably going to continue a bit light leaving moisture deficits in place.  Gist of weather right now is bearish.

REPORTS

Disaggregated futures /options as of July 28 in contracts:

beans:  net long 62,161

meal:  net short 19,464

soyoil:  net long 37,549

corn:  net short 142,280

wheat:  net long 1,699

The surprise in the report was the mostly steady corn short, which did not change much from last week despite the fact that prices are now near contract lows.  The COT for corn shows that there is some bargain hunting in this market, which could suggest that prices are nearing lows.  

Funds did reduce their length in beans.  On the commercial side, the net short in beans is the largest for this time of the year since 2016.  Funds could easily add to their length in soyoil, where the modest long is occurring even as prices are on the rise. If funds want to add to this soyoil position, would look for prices to continue to rise. 

ANNOUNCEMENTS

Argentina's President Fernandez on Friday extended BA's region lockdown until August 16th.    

Strategie Grains increased the rapeseed harvest for the EU plus Britain to 16.8 mmt vs. 16.5 mmt prev.    

Brazil's Arc Mercosur estimated Brazil's safrinha corn harvest at 64.6% vs. 67.3%.  Slowing harvest was exacerbated by rains over the last week in southern growing regions.  

Argentina's plan to take over the cash-strapped crush plant Vincentin will not take place, according to a tweet sent by President Fernandez.  

DELIVERIES

Soyoil:  210

Meal:  24

CALLS

Calls are as follows:

beans:  4-6 higher

meal: .90-1.00 lower

soyoil:  40-50 higher

corn:  1/2 higher

wheat:  6-8 lower

OUTSIDE MARKETS

Feature crude at $40.43/barrel, the US dollar at 93.83, and stocks up 152 pts. 

TECH TALK

• December soyoil breaks through the 50-day moving average of 3050c to trade back towards 31c and into new market highs for the power move up.  Next target based on today's price action is 3212c.  Look to probably while support moves up to prev. double highs of 31c.  The uptrend is strengthening meaning traders will be looking for pullbacks to own.  
• November beans build on last week's reversal with prices trending near trendline resistance at $9.03, and the 200-day moving average at $9.06.  Would look to at least test this level given the ability of prices to rebound from lows which shows inherent strength.  
• Dec. meal fades back into its sideways trade which is from $291.00 on the downside to $305.00 on the upside.  Trendline support is $294.00 and if we reach that would expect it to hold.  
• Dec. corn continues to congest around current lows from $3.25 to $3.26 and may become "stuck" once more as prices grind towards new lows.  
• Sep. wheat continues to grind sideways from its 100-day moving average of $5.23 to its 200-day moving average of $5.36.  Prices below $5.18 will find a quick downside break towards $5.05/$5.08 as there would be little back support to stop a lower trade.  

DECEMBER SOYOIL

The trend has been higher month after month.  The market continues to set new highs, followed by sharp 100 point breaks that rebound.  Look for pullbacks to own.    Prices maintain higher trade within the broad uptrend channel.  The last pullback offered up a successful test of 30c, and the move over 3050c (the 200-day moving average) set the stage for prices to trade beyond double highs of 3105.  With this type of strength would look for prices to target 3212c, with a stop at 3180c which is trendline resistance today.   Continue to own this market given its strength for what could come a 30c-32c trading range.  

ON THE CALENDAR

Export inspections at 10:00, crop ratings at 3:00 central time.  Most traders expect steady to slight increases.  

 

 

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America