Prices opened on a mixed note overnight, higher beans and wheat, lower corn. Weather is wide open for harvest. Soyoil futures opened lower vs. meal, and the EPA did not publish any biofuel mandate guidance as rumored last Friday. Beans continue to have a bid currently, as there is simply more chatter that China has been in the market actively purchasing despite a lack of export sales last week.
The big event of the week will be the Sep. Quarterly Stocks report due out on Thursday, and expect more position - squaring into the numbers. Here are the average advertised guesses for Sep. 1 stocks:
beans: 0.174 bln bu
corn: 1.153 bln bu
wheat: 1.855 bln bu
Outsides are supportive overnight led by new highs in crude oil, and a good performance out of stocks. There is further discussion of inflation as energy prices rise, as crude oil is often a barometer for commodities in general. China and EU energy prices are at record higher, as crude in the US sits at 3-year highs.
Chinese state planners continue to work to resolve power shortages that have disrupted production since the end of June, when new measures to curb emissions kicked in. At least three bean processing plants in Tianjin were forced to close recently.
Brazil will suspend corn import tariffs through the end of the year, highlighting the tight situation there. There are also reports that very high and tight ocean frights are hindering export business. US corn remains the cheapest feed ration. Corn is lower overnight, seeming to be the sell leg of wheat and beans. Wheat prices hit new highs on chart-based buying, and ongoing active tender business. Russian wheat prices rose for an 11th consecutive week, following higher Matif values.
--Temperatures in the Grain Plains remain hot from the upper 80's to 90's. Warming temperatures and wide open weather for the middle of the country is on tap which will allow harvest to progress quickly. Winter wheat crops need moisture for germination and emergency. HRW areas will see a good chance for rain on Tues/Wed., which is badly needed. Most of the rain this week will be in central Neb., and north-central Kansas, with a second wave due to hit Oklahoma and northern Texas. --
--South America is neutral for now but will need more rainfall heading into next month.
Gist of the weather is bearish.
Commitment-of-Traders report disaggregated futures/options combined:
beans: net long 49,701
soyoil: net long 38,980
meal: net short 18,553
corn: net long 214,350 (net buyers of 5K corn, which was mostly short-covering)
wheat: net short 5,491
Funds have shown an inclination to keep the small long in corn, but the soy complex is slowly losing length in beans and particularly soyoil.
Cattle-on-Feed was higher than expected, with on-feed at 99% vs. 98% expected, with strong placements of 102% vs. 99% expected. Marketings were in line at 100% of year earlier.
Sep. 1 all hogs were seen at 96% vs. 98% expected, and 98% in June. Farrowing intentions were a bit light with Dec/Feb intentions 101% of year ago vs. 100% forecast.
Argentina's BA Exchange forecast 21/22 corn planting at 8.5% complete vs. 2.3% prev. wk.
Ukraine's grain harvest is 66.5% complete vs. 46.4% week ago, as reported by the Ag Ministry. Ukraine's Ag ministry noted the 2021 wheat harvest was 60% mill grade, nearly matching year ago.
Survey of analysts forecast the 21/22 Brazil bean crop at a record 143.75 mmt, an increase of 5.7% vs the prev. high. Weather conditions will allow for early planting which will also provide for larger corn and cotton crops.
Calls are as follows:
beans: 1-3 higher
meal: 2.80-3.00 higher
soyoil: 50-60 pts lower
corn: 1 1/2-2 lower
wheat: 1 higher
Stocks up 70 pts, with crude oil trading up to $75.33/barrel, and the US dollar down to 93.20.
- November beans in a defined trading range though prices are now trending slightly up and away from the 200 day moving average which is always slightly friendly behavior. Top is $12.95/$13.05 for now, but volumes to drive beyond that are lacking, suggesting we test it with likely failure.
- The December meal chart is sideways with a slightly lower bent, and like the beans have now visually defined a trading range from $335.00 to $345.00. Clearing tops at $345.00 opens the door to a short-covering rally, but for the moment no need for that.
- December soyoil prices bounced off 54-55c but had to clear 5875c before a further rally towards the 100-day moving average of 60c could transpire. Soyoil prices are turning back from a peak high at 58c, and would look for the 56c level to be tested, but to also become a buying opportunity as prices congest from 56c-58c.
- December corn prices checked in lower from the get-go last night and could not gather any upside steam. As such, would look for $5.25-$5.28 to reinsert itself as resistance again while prices merely congest from $5.15 - $5.35 sideways. Trend at 12 ADX shows that prices are trapped, and volumes ticking lower.
- The December wheat chart does find upside follow-through with a new trading range high since the lows of $6.88 at $7.28 1/2. Major trend is sideways, but prices are trending up and away from the 100-day moving average of $7.01. Think we could be close to a temporary high in front of the report, with the last high before the big break to our lows clocking in at $7.33. As such, $7.28-$7.33 is key resistance. Funds are short here, so the upside could be on the back of short-covering and not new length. Charts are not overbought nor oversold, so would look for $7.00-$7.35 as a likely range this week into the report.
Prices continues rangebound from $12.65/$12.70 - $12.95/$13.05, with an ADX at only 10 which denotes extremely weak trend. Duly noted that prices are still closer to the lower end of recent lows of a wider $12.75-$13.53 trading range. Prices remain rangebound between the 200-day moving average at the low at $12.75 and the 100 day moving average overhead at $13.45. The sideways pattern is dominant and funds continue to slowly liquidate length. Since friendly market price action needs volume, the chances of testing the lows again are likely, though at this point in time the market is trending sideways / higher. IT would take a close over $13.05 to change the trend from sideways to sideways/higher. Could straddle/strange the 12.65-$12.95 for now as we approach the Quarterly stocks report on Thursday.
TAGS – Feed Grains, North America