GOOD MORNING,
Prices are mixed this morning with short-covering in corn and lower prices elsewhere. Prices started out in the PM session on a strong note, but lost that strength into the morning. Wheat prices appear ready to test recent lows, with corn prices very close to yesterday's lows as well. Nearby bean spreads are slightly weaker, but still remain an inverse. July positions are still being liquidated or rolled heading into first notice day on 30 June. Funds sold Ags yesterday on the rising virus fears, and good weather is capping off any type of rally. Funds now hold what could be a 330K short futures/options combined position, which is extremely heavy on the short side, and that could keep corn prices well supported during the session today.
WEATHER
Mostly ideal weather is expected next week, with broad rain coverage and seasonable temperatures. Periods of showers will continue over the weekend, with rain returning to the Delta. The 6/10 outlook calls for isolated showers next week, with temperatures above normal Tues. through Saturday. For now, rainfall is viewed as adequate and weather is construed as bearish.
ANNOUNCEMENTS
China’s Customs Ministry announced that May imports of Brazil beans were 8.86 mmt, up 41% from year ago and the highest level since 2018. May imports of US beans were only 491,697 mt, down 40% from year ago. Prices for US beans are much cheaper now, meaning China should continue to buy US origin from this point moving forward. They will have to contend with poorer crush margins as well.
The soft wheat crop in France is forecast at 30.3 mmt this year, down by more than 1/5 of last year's record haul, as reported by the European Commission.
Ukraine's grain harvest could fall to 72.4 mmt in 2020 vs. a record 75.1 mmt in 2019 due to less ideal weather.
Brazil's state of Parana increased their Safrinha corn crop estimate to 11.36 mmt vs. 11.26 mmt prev., according to the consulting agency DERAL.
CALLS
Calls are as follows:
beans: 3-4 lower
meal: .80-1.00 lower
soyoil: 5-10 lower
corn: 1/2 lower
wheat: 2 1/2-3 lower
OUTSIDE MARKETS
Oil trades down to $38.50, US dollar unchanged and US equities down 120 pts.
TECH TALK
- The break in Sep. and Dec. corn yesterday moved resistance levels down and sets the market up for another test of these lows again today. Dec corn placed a new contract low at $3.24, which typically can get tested again. Key resistance in Sep corn moves down to $3.27 1/2 to $3.28, while the low at $3.17 must not prove it can hold.
- Sep wheat futures consolidate between $4.81-$4.94, but weaker prices today will test key support at $4.83. A break of $4.83 will open the door to a test of $4.77/$4.81.
- November beans trigger sell-stops through the lows of the market recently at $8.65 but continues to show life by bouncing back again. For the morning prices could test $8.58/$8.60, but think it holds should we go there, and would not be surprised to see two-sided trade for this market.
- Dec meal trades down to $290.50 with a rejection low trade, which is more positive in scope than negative. The sharp break to the low of $290.00 was a good pricing opportunity.
- Dec soyoil futures break towards 28c with a 2821c low followed by a turn higher from lower. If short, dips towards 28c should be considered good buying opportunities, while the best coverage remains at 2790c.
DECEMBER CORN
The major direction turned lower from sideways hitting a new contract low at $3.24 yesterday followed by an inside day of trade so far today. Overall, the new contract low must now prove it can hold $3.24 support, so would look for another test. The move to new contract lows was met with good commercial pricing activity, as noted by the high volume on the day and a mid-range close. Could begin to straddle strangle the market from $3.24 - 3.35 /$3.38 into the June 30 report, as so far there is not much downside follow-through. Prices would have to now settle under $3.24 to begin a new leg lower.
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