World Perspectives
feed-grains soy-oilseeds wheat

AM Outlook - Mostly Lower on Good Crop Conditions

GOOD MORNING,

Prices are mostly lower today as good crop conditions were confirmed in the USDA report.   Conditions improved more than expected for beans, and were unchanged for corn.  That mostly assures that good crops are coming. STONEX, (formerly FC Stone), forecast 2020 corn yield at 182.4 bpa, with production at 15.230 bln bu.  The also forecast beans with a 54.2 bpa and a 4.496 bln bu carry-out.  Corn and beans are lower this morning.  Soyoil is the only market that is in the green on the back of rising oilshare amidst good veg - oil demand.   

The USDA August 12 report will include a farmer survey. 

WEATHER

Cooler and slightly drier conditions are in store for much of the Midwest this week.  The lower temps will help subsoil moistures.   The tropical storm Isaias is moving across southeastern Virginia with strong winds, heavy rains, and tornado threats.  Areas that need more precip. includes Iowa, Neb. and Ohio.  Weather is bearish for prices this morning.  

REPORTS

Crop progress

Corn:  72% good/excellent, unchanged from week ago.  Silking:  92% vs. 82% week ago, and vs. 5-year average of 87%.       Dough stage:  39% vs. 22% week ago and vs. 5-year average of 33%.  

Soybeans:  73% good/excellent up 1%.  Pod setting:  59% vs. 43% week ago, and vs. 5-year average of 54%.  Blooming:   85% vs. 76% week ago and 5-year average of 54%

Winter Wheat:  85% harvested vs. 81% week ago and 5-year average of 88%

Spring Wheat:  73% good/excellent, up 2% harvested: 5% vs. 1% last week vs, 5-year average of 10 

USDA Grain Crushings and Co-Products:

June 2020 bean crush:  crush:  5.318 mmt vs. 5.33 mmt expected meal stocks:  420,426 mt, soyoil ending stocks:  2.27 bln lbs vs. 2.336 bln expected 

Corn for fuel alcohol:  378.900 mln bu

ANNOUNCEMENTS

Brazil's Mato Grosso IMEA projected 20/21 bean planting at a record 10.21 mln hectares, vs. 10.07 mln hectares.

Brazil gov. forecast July 2020 bean exports at 10.37 mmt vs. 7.44 mmt year ago.   Brazil's gov. estimated corn exports at 4.15 mmt vs. 5.90 year ago.

Ukraine's grain trade group UGA increased their 2020 corn harvest forecast to 38.9 mmt, an increase of 2.1 mmt vs. the prev. estimate.   Corn exports are forecast at 33.0 mmt for 20/21, up 2.7 mmt vs. year ago.  Ukraine remains a key competitor for this market.  

Russia has harvested 61.0 mmt of grain according to their ag ministry. 

DELIVERIES

beans and meal:  0

soyoil:  24

CALLS

Calls are as follows:

beans:  4-6 lower

meal:  1.50-1.80 lower

soyoil:  10-4 higher

corn:  2-2 1/2 lower

wheat:  4 1/2-5 1/2 lower

canola:  2.40-2.80 higher

OUTSIDE MARKETS

A weaker stock market with the Dow down 78 pts., crude oil slightly weaker at $40.99/barrel, and the US dollar at 93.27.  Gold prices are up $5.00 to $1976.20/oz. 

TECH TALK

  • December soyoil continues to trend higher posting another at 3178c this morning.  This high touches major resistance for the morning, which is 3180c.  If long, may want to take a partial profit here since prices are now testing this visual resistance line.   Target high for Dec. soyoil is 3212c.  
  • November beans back and fill but the price action is not bearish as prices find bids on the way down.  Look to begin to move sideways from $8.85-$9.05 for a bit.   
  • December meal charts turn negative breaking trendline support at $294.00 to trade to $293.50.  The break of support at trendline turns prices down and suggests that lower prices will be tested which includes $290.00-$291.00.  Price action is sideways/lower, but resistance has become stronger than support at this point.  Double lows at $292.50 could also hold a break.  
  • December corn remains trapped from $3.25-$3.30 but continuing to hang around recent lows suggests that prices will probably break-down further.  Would look for a test of contract lows of $3.22.  
  • Sep. wheat breaks key support at $5.20, which opens the door to corrective price action to $5.15.  Would look for $5.12-$5.15 to cushion a break short-term, but any trade under $5.12 provides little support until prices break down to $5.00 again.  

SEPTEMBER WHEAT

Overall trading range is wide from $5.00 at the lows to $5.51 1/2 at the high.  Prices were able to chop back and forth from $5.20-$5.50 after the July 8 rally day, but the exit to the downside of $5.20 is bearish and makes the chart look toppy.  Trading through trendline support levels increases the chance of extending losses downward.   Prices average now dropped back to first support which is from $5.12-$5.15, and average to stay above this level to stabilize.  Any trade under $5.15 will trigger a pullback to the bottom of the range at $5.00, as there is little support on the retrace down till we get there.  

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From WPI Consulting

Infrastructure investment due diligence

On behalf of a Canadian oilseed processer WPI's team provided market analysis, econometric modeling and financial due diligence in support of a $24 million-dollar investment in a Ukrainian crush plant. Consistent with WPI's findings, local production to supply the plant and the facility's output have expanded exponentially since the investment. WPI has conducted parallel work on behalf of U.S., South American and European clients, both private and public, in the agri-food space.

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