GOOD MORNING,

The soy complex continues to build on gains after two days of market weakness.   December soyoil follows a sharply higher palm oil market, while beans continue to firm on a continuation of Chinese bean announcements.  US beans still remain the best buy, as Brazilian bean export prices rally sharply due to low supplies and a lack of farmer selling.  Corn is still hanging close to the low end of the trading range on continuing good weather and increased production potential.  Offering support for corn is the fact that flooding in China is continuing to impact corn acres, which could increase potential purchases of US origin. Cheaper SA and Ukraine will offer alternatives to China. 

General themes continue this morning, namely buy bean/sell corn trade, and extremely firm nearby bean spreads which appear to offer spillover support for corn as well.

WEATHER

Rains continue to fall over the Midwest, benefiting the eastern Corn Belt this week.  Central Illinois also picked up relief from dry spots, along with Iowa.  This week's system could trigger rains over Minn., and Nebraska.  The 6/10 day and 8/14 day outlooks trend cooler but drier.  

REPORTS

Export Sales:

Beans:   19/20 net 365,200 mt and 20/21 net 2.3 mt (vs. an expected 19/20 at 300-700 and 20/21 net 1.0-2.0 mt)

Meal:     19/20 net 45,300 mt and 20/21 net 54,200 mt (vs. an expected 19/20 at 100-300 mt and 20/21 net 75,000 mt)

Soyoil:  19/20 net 20,200 mt (vs. an expected 19/20 at 5-30 mt)

Corn:     19/20 net 220,600 mt and 20/21 net 2.33 mt (vs. an expected 19/20 at 400-1.0 mt and 20/21 net 1.5-3.0 mt)

Wheat:   19/20 net 616.700 mt (vs. an expected 300-600 mt)

Export sales were solid, with a fairly muted reaction.  Market had generally already factored them in.  

Wheat:  Good, above estimates.  Demand surfaced off rising overseas premiums.

Corn: Poor old crop sales but decent new.  Large Chinese sales were announced but factored in already.  China was 1.96 of the new crop sales.

Beans:  poor old but good new as anticipated.   China accounts for 65% of new crop.

Meal: poor old and moderate new sales.   

Oil:  moderate to good sales as rising world oil premiums and tighter palm oil supplies boosts numbers

ANNOUNCEMENTS

The International Grains Council, (IGC), cut wheat and corn harvests for next year.  In its monthly report, IGC forecast 20/21 grain harvest at an estimated 2.225 bln metric tons, 13 mmt less than mo ago.  It said its wheat harvests would produce 762 mmt, six mln less than mo ago, while corn would produce 1.164 bln tons, five mmt less than mo ago.

According to Chinese customs data, China imported 400,000 mt of pork in June, up 128% vs. year ago.  

Russia shipped two wheat cargoes to Brazil this month, totaling 60,000 mt if the first trades of its kind.  Most of Brazil's wheat imports typically come from Argentina.  

Chinese customs data showed corn imports for June 2020 at 880,000 mt, up 23% vs. year ago.  Sorghum imports totaled 680,000 mt, up 21%% vs. year ago.  

CALLS

Calls are as follows:

beans: 1-2 higher

meal:  .60-.80 higher

soyoil:  4-8 higher

corn:  1 1/2-2 lower

wheat:  3 1/2-5 lower

OUTSIDE MARKETS

A continuing lower US dollar, which is quite positive for Ags.  The US dollar trades to 94.78, with crude oil at $41.67/barrel.  Gold prices trade to $1868.70/oz.  Stocks are higher up 66 pts.  

TECH TALK

• December corn futures firms off the lows of $3.30, with futures unable to penetrate it in order to set off sell-stops.  Charts still look like prices could slip under $3.30, which could move the market to test $3.25/$3.27.  
• September wheat covers a wide trading range holding $5.18 to test the 200-day moving average of $5.35.  Prices could stage a rally past $5.35 which would trigger more fund buying and a move back towards $5.45.  
• November beans set up into what could be a bull flag formation within a triangle pattern.  The ability of beans to hold together at higher prices continues to impress.  The minor resistance line forms from $8.98-$9.02, so moving above $9.02 again will likely trigger a better run at $9.10.  
• December meal prices congest still from $290.00-$295.00, stuck in a triangle formation.  Since prices entered the triangle higher, would look to probably exit this period of congestion with trade back towards $299.00.  
• December soyoil prices continue to drift lower in a correction from double highs at 3105c to 3106c.  This was just shy of the target high at 3115c, but cannot rule out another stab at new highs again.  A move back below 30c probably takes prices back to 2960c, which would be an excellent place to cover a short or try the long side of the market.  

DECEMBER MEAL

Overall trading range is from the ctr low of $287.50 to $299.00.  Prices remain in congestive mode at the lower end of the trading range, but each pullback is holding firm at recent lows at $292.50.  A gap remains open over the market at $299.00-$299.50, which is small in nature and now represents the top of the trading range.  The trend is extremely weak with an ADX reading of only 13, which represents the sideways trading range.  If needing to price, the chart for the moment appears to be fortifying support at recent lows at $292.00, so would probably take this opportunity to get something on the books on a trade back down to $292.50-$293.00 should we go there.  

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