GOOD MORNING,

The main trend that started last week, namely firm bean and soyoil trade, continued in the PM session trade.  Bean prices continue to see support from more Chinese buying of US cargoes, while soyoil gets support from talk of possible coronavirus aid for the biofuel sector, and a strong palm oil trade.  Oilshare is sharply higher this morning.    Officially declared bean sales to the USDA for China and unknown destinations for 19/20 and 20/21 now total 1.52 mmt, or 32 cargoes.   AgriCensus stated that the number of bean cargoes sold is probably higher than that.  China's reiterations that they would honor the Phase One deal, (though US beans are indeed much cheaper than Brazil), keeps prices afloat even as beans enter their key growing stage in about 2 weeks-time.  

Buy beans/sell corn trade could be the big spread item honored this week, as hot temperatures were cooled off by a series of storms crossing the plains.  Ratings for corn could increase in this afternoon's crop progress as rainfall continues during pollination.  

South American estimates for the 20/21 season suggest that the weaker Brazilian Real has allowed for further bean expansion for next year.  Safras Mercado estimated that the 20/21 Brazil bean production numbers could hit a record 131.7 mmt, which would be 5.4% higher than 19/20.  Acres are forecast at 37.8 mln hectares, an increase of 1.8% vs. last season.  

WEATHER

US: Areas had hotter than normal temperatures as called for over the weekend, but also saw a cool front slide down through Kansas to Missouri with showers across the area Sunday - Monday.  Temperatures return to a more neutral degree.  Rains were scattered across the northern plains into the western Corn Belt.  Parts of Iowa may miss out on rains, which would create more dryness, but many other areas have chances for more moisture throughout the week.

Global:  China's communist gov. increased their flood alert along the Huai River basin to a threat level 3, just a step below the highest alert.  China has had the worst flooding in 30 years.    

REPORTS

Commitment-of-trader's report as of July 14, futures/ options combined:

beans:  net long 65,975

meal:  net short 30,451

soyoil:  net long 10,198

corn:  net short 133,625 - larger than expected short-covering here, with the wk ending 7/14 buyers of 19,310 corn 

wheat:  net short 8,327

Since the June Acreage and Stock report, funds have covered around 1/2 their corn short position.  That net short in wheat was negative for the market as it assumes the rally was mostly about shorts getting squeezed rather than buying interest.  

ANNOUNCEMENTS

Brazil's Safras sees expanding first crop corn planting by 1%.  By contrast, Argentina's Rosario believes Argentine farmers will trim corn acres by an estimated 7%.  

Chinese food importers are telling vendors that imported food testing for covid-19 has pushed capacity at some ports to near limits.  Shippers are reporting their customers may be diverted to other ports and expenses associated with those changes.   

Brazil's Arc Mercosur estimated 2020 second season corn harvest at 44.7% complete vs.  60.7% year ago, and 44.3% long term average.  

CALLS

Calls are as follows:

beans:  2-4 higher

meal:  .90-1.20 lower

soyoil:  45-55 higher

corn:    2 1/2-3 1/2 lower

wheat:  5-6 lower

OUTSIDE MARKETS

A weaker US dollar at 95.74, and weaker crude at $40.04/barrel.  Stocks are 30 pts lower.  

TECH TALK

• Beans and soyoil closed gap-lower trade, and trade over those gaps has fueled this rally.  November bean prices continue to climb higher after rebounding off $8.70.  Support on a break now moves back to $8.80, and for the day minor trendline resistance crosses at $9.09 once again.  Path of least resistance continues to move higher, funds are long, and therefore would own pullbacks.  Upper targets have strong resistance from $9.08/$9.10.  
• December meal is still contained in sideways trade from $290.00-$295.00, but the chart appears prone to further breaks than rallies for the moment.  A break of $293.00 would open the door back towards $290.00.  
• December soyoil chart features a break-out trade into new highs this AM.  Price action targets 3115c, but above that 3185c to 32c.  
• December corn stalls at the top of a gap overhead from $3.42 - $3.43 3/4.  The gap is small in nature, which suggests that it could be filled in sooner rather than later.  However, leaving it open favors bearish activity, and in that case moving below $3.33 will trigger sell-stops and a test again of $3.30.  
• Sep. wheat trades down to major support at $5.30, with trendline support on a further break at $5.22.  If short, may choose this level to cover part of it, or try the long side of the market.  Bears will have the advantage, however, on any break under $5.20, as there is not much back support to stop a slide towards $5.12/$5.15 or lower.

DECEMBER SOYOIL

Prices continue to work higher with a solid upside break-out.  Prices traded over the 200-day moving average at 3053c with good upside follow-through.  The upside target at 3115c is in sight, and would look for a very good chance it is reached.  Lower support moves up to 2965c on a pullback, with second support located at 30c.  On a back and fill trade, would cover any short position at 2965c to 30c, or try to own the market from the long side as price action has been extremely strong.  Overall trading range could move up to 2965c-3115c or higher.  Upper target is 3185c/32c.  

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