GOOD MORNING,

Prices are mostly lower this morning after better than expected crop ratings were released.  Wheat prices broke lower yesterday as this market enters into its extreme technical playbook.  World values continue higher, though the Euro is fluctuating bringing with it some weaker values for Matif wheat, with the US as a follower.  Traders are still looking for the rumored sale of SRW to China, but it is still lacking.  Wheat opens higher, and seems to have a point of stabilization.  Dec corn is lower, pushing through some recent trendline support at $3.33.  One trip lower is usually good to hold, but repeated returns to support eventually erodes it.  Higher ratings improve the chance for a trendline yield of 178.5 bpa or better.   

The soy complex turns lower on better ratings, perhaps a higher trendline yield, and the need for Chinese demand to counter big crops coming.  Rumors continue that China is around the bean market, which is keeping breaks well supported.  Soyoil derived support from higher palm, but that market corrected overnight leading to some selling pressure today. 

WEATHER

A ridge will return to the southwest this week.  The 6/10 outlook calls for isolated scattered showers this week extending into the weekend.  Temperatures remain near to above normal through Thursday.  About 15-20% of areas still remain dry, with drier spots in Iowa.  Those dry spots could see some relief this week.  Showers will help corn through pollination and improve blooming and pod-setting in beans.  

REPORTS

Crop Progress:

Corn:  69% good/excellent, up 1%.    Silking:  59%, up 30% WOW, and 5% ahead of the 5-year average.    Dough stage:  9%.  Iowa was down 3% G/E, but Illinois was 2% higher.  

Beans: 69% good/excellent, up 1%.  Blooming:  64%  Setting pods:  25%

Winter Wheat:  74% harvested, moving up 6%, and vs. 66% year ago.  

Spring Wheat:  ratings unchanged WOW at 68% good/excellent.  Minnesota ratings declined a bit.  The crop is 91% headed vs. 88% year ago.  

Gist of the report was better-than-expected ratings that are weighing on prices today.  

ANNOUNCEMENTS

China plans on selling rice and wheat from state reserves to animal feed producers who are struggling with high corn prices, which have soared more than 20% in some areas this year amid tightening supplies.  

Ukraine's stats bureau, according to APK-Inform, forecast grain ending stocks as of July 1 at 5.53 mmt, below the 9.2 mmt year ago.  

Brazil's SECEX estimated corn exports at 1.7 mmt, which is an average of 133,000 mt /day, down from 257,600 mt/day year ago.

BUSINESS

Egypt tendered after the close for last half August shipment.  Egypt will use letters of credit that guarantee payment within 180 days vs. making immediate payment.  Last tender was awarded to Russia.  Expect the same in all likelihood though Ukrainian wheat is the cheapest offer so far. 

CALLS

Calls are as follows:

beans:  6-8 lower

meal:  2.20-2.50 lower

soyoil:   5-10 lower

corn:  2 1/2-3 lower

wheat:  2-3 higher

OUTSIDE MARKETS

Outside markets feature a weaker US dollar which trades to 95.66.   US equities are firmer up 190 pts, and S&P's attempting to hit new trading range highs.  Crude oil trades to new highs at $42.16/barrel, and gold prices jump to $1823.20/oz.  

TECH TALK

• November beans trend sideways to higher, despite a negative seasonal tendency for beans to trend lower from July through Sep.  This could still come into play as prices are having a tough time moving over $9.00 with sustained strength.  
• December meal prices continue to carve out a trading range with an outside day higher Monday and retracement back today.  Look for meal to find support in pullbacks towards the $293.00 area as traders unwind soyoil/meal spread trade.    
• December soyoil trades above and below its 200-day moving average of 3053c, as prices back and fill from 3106c high trade.  It may take a bit for soyoil to head back towards those highs, as 100 pt pullbacks are not unusual in this choppy market.  Would look for 2980c to offer up lower support on a better price dip, and certainly 2965c should we go there.  
• Sep. wheat appears to have found support now at $5.18/$5.20.  If short, would probably elect to cover something in, as this has been a strong corrective break in a market that has been sharply higher in recent days.  The ADX up-trend is still strong at 30, meaning that traders are still looking for places to own this market.  
• Dec. corn remains trapped in a $3.30-$3.40 range, and once again begins its day on trendline support.  If wheat prices trade back towards $5.35, which seems to be very likely, it may hold corn at present lows.  

DECEMBER CORN

Overall trading range has been from $3.30-$3.50 but the inability of corn to fill a gap- lower trade is bearish, and reinforces new resistance from $3.39-$3.40.  Trade returns to trendline support once again at $3.32, but returning to technically increases the chance for a larger break.  A break of $3.30 turns prices lower and the next level of good support crosses under the market at $3.18-$3.22.   Since prices begin the day on trendline support, would be a key day to see if the trading range will broaden to the downside or not.

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