GOOD MORNING,
After remaining mostly steadfast in their fund positions over the last few weeks, the funds finally decided to liquidate a portion of their positions heading into the Wed. USDA report at 11:00 central time yesterday. After a lower start to the evening, prices worked back higher from lower for all but soyoil. Overnight trends include a continuing correction in oilshare and firmer spread trade.
Report advertised estimates for the May WASDE are out and they are as follows:
bean ending stocks: 20/21 at 117 mln bu, 21/22 at 128 mln bu
corn ending stocks: 20/21 at 1.275 bln bu and 21/22 at 1.344 bln bu
wheat ending stocks: 20/21 at 845 mln bu and 21/22 at 730 mln bu
Brazil corn estimates are at 103.1 mmt vs. 109 mmt in April.
Beans are razor thin in terms of supply, corn not so much. The Brazilian Safrinha crop will have to come down, but USDA may play it safe here and catch up later when the crop gets closer to harvest. In the meantime, the trade has fully embraced a sub-100 number for the Brazilian corn crop.
WEATHER
--US weather turns warm and wet after a cool week last week. Better rains than expected moved throughout HRW country and the outlook for this week features much the same. The central Midwest will continue to see good rains. Showers continue to move through the Delta, which may create some planting delays but helps soil moisture.
--Argentina remains dry, which will favor harvest. Brazil remains warm and dry over the next two weeks, leaning wetter after that.
Gist of US weather leans bearish, Brazil weather bullish but factored into price action for now.
REPORTS
Crop Progress:
Corn: 67% planted vs. 65% year ago, and 52% average, an advance of 21% WOW. Emerged: 20% vs. 22% year ago
Beans: 42% planted; Emerged: 10%
Winter Wheat: improved 1% WOW to 49% good/excellent, vs. year ago at 53%. Most of the improvement noted was in HRW with conditions up 1% to 45% good/excellent. Oklahoma and Texas conditions were each up 5-6%, South Dakota up 3%. Headed: 38% vs. 42% year ago.
Spring Wheat: Plantings: 70% complete. Conditions are 70% good/excellent, unchanged from week ago. Mo. was up 4%, with Ark. and Illinois up 1-2%. Emerged: 29%
Crop progress is bearish, with crops heading into the ground in a mostly timely manner, and conditions stable.
ANNOUNCEMENTS
Russia's April exports of wheat, barley, and maize are estimated at 2.1 mmt, down from 2.4 mmt in March as reported by SovEcon.
France is forecast to see a 10% drop in spring crop, as reported by the farm ministry.
Brazil's IMEA reported the 20/21 Mato Grosso bean crop at 83.5% sold, vs. 88.9% year ago, and vs. the 78.3% long term average. They estimated the 21/22 crop at 27.7% sold vs. 37.3% year ago, and vs. the 14.8% average.
CALLS
Calls are as follows:
beans: 7-10 higher
meal: 3.50-3.80 higher
soyoil: 20-25 lower
corn: 7 1/2-8 1/2 higher
wheat: 8-9 higher
OUTSIDE MARKETS
Crude leaning lower to $63.86/barrel and the US dollar at 90.05. Equities are lower down 240 pts.
TECH TALK
- July bean prices would not break much during yesterday's correction and overnight prices traded down towards trendline support at $15.70 with a bounce-back trade this AM. Look for the strong possibility that prices now trade to new ctr highs, and fuel a further rally. November bean prices trade back under $14.00 to $13.97, but the pattern has been to walk back and test major benchmarks which tend to hold for higher trade. If short Nov. beans, would scale down cover from $13.90- $14.00, and try the long side of the market.
- July meal prices hold the $438.00 level and come up against its major trendline resistance which crossed at $445.00. The market moved through $445.00, however, which usually indicates that there is more strength ahead. If prices clear $450.00, there is not much back resistance until we reach $455.00 to $458.00, and it appears more likely than not that we are going there.
- July soyoil prices test 63c once more as traders unwind prev. buy soyoil/sell meal spread trade. The major uptrend line was pierced at 6325c, but this has been a strong bull market, and if short would go long against 63c or cover a short on a scale down basis for a 63c - 66c trading range.
- July corn prices nearly tested $7.00, which is a strong support level. Prices are now higher and move into key resistance at $7.22/$7.25. Double tops are located at $7.30 and the pullback towards $7.00 was met with full recovery, suggesting that prices could test our ctr highs once more. Look for pullbacks towards $7.15 as a buying or pricing opportunity should we go there. December corn prices just pierce $6.00 but also recover nicely. Major support is at $5.90, but solid bull markets rarely let you buy them at the most advantageous level. Would look for the likelihood of further advances, and a test of $5.95-$6.00 is an opportunity to price or try the long side of the market.
- July wheat bounces back from major support which is located at $7.15- $7.20. Look for prices to remain sideways from $7.20-$7.60, pivoting around the middle. Hard to trust this rally, but since we are at the bottom of recent price congestion could easily retrace the break with values heading back towards $7.50 again.
JULY BEANS
The market continues to show an amazing amount of resilience, with prices still in position to head higher. The market would not break much yesterday when prices were lower elsewhere on the board, and that is a sign of inherent strength. Prices now bounce back from $15.73 morning lows to approach the now ctr high at $15.99 1/2 and do is within an uptrend line and a friendly ascending triangle formation, which increases the chance for higher trade. If prices head over $16.00, crossing lines of resistance cross higher at $16.30, which is the amount of rally that beans go for when break-outs occur.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America