GOOD MORNING,

Prices were firmer overnight but have since turned lower.  Wheat futures are lower with larger production out of Russia and Canada, as world supplies grow.  Russian wheat prices are lower as new crop hits the market.   Beans are weaker on more fund liquidation as good weather promotes further production and yield talk, along with new headline stories concerning China.  Headlines state that China said it would impose sanctions on 11 US citizens, including Sen. Ted Cruz and Marco Rubio in retaliation for similar measures by Washington against Hong Kong and Chinese officials on Friday.  Tensions continue between China and the US as the White House announced a ban on TikTok and WeChat.   Corn is lower on good weather and higher production and yields as well.

This week features the August 12 WASDE report.  Recent prices have reflected ideas that production and yields for corn and beans are going to be big.  

Corn:  Yield guesses are ranging from 177.5 bpa low end to 183.3 on the higher end.   Funds will head into this report with a large fund short in corn.  In years of big supply, the August report has sometimes been a turning point, for corn particularly.  It will be interesting therefore to see how the funds want to manage a bearish report if we get one.  Sell the story, buy the fact may be the theme.   

Wheat:  All wheat average production ideas are around 10 mln bu higher than last month's 1.824 bln bu.  

Beans:  Yield guesses range from 50.0-54.0 bpa.  Funds are liquidating their length, and could flip to a short position.  China continues to buy US beans as they are the cheapest, so exports in this report could be revised upward.    Soon there will be plenty of bean cargoes setting sail from the US to China ports.   

WEATHER

The 6/10-day outlooks are for continued rainfall in the Midwest, with some rain in Minn. and Wisconsin, and part of the Dakotas and Illinois/Ind.  Temperatures will warm this week, and are expected to be above average of at least the next two weeks, according to NOAA.  Parts of Iowa are still expected to miss important rains.  

REPORTS

Commitment-of-trader's report as of August 4 futures/ options combined disaggregated:

beans:  net long 44,220

meal:   net short 20,985

soyoil:  net long 48,333

corn:  net short 172,820

wheat:  net long 1178

The wheat position was a surprise, as many expected a larger short position.  In KC wheat, funds were sellers of 5600 contracts, which increased their net short to 33K.  Funds are net around 22K spring wheat. Selling in corn was heavier than expected, with funds adding 39K short positions.  

ANNOUNCEMENTS

China's bean imports in July this year reached their second-highest level ever at 10.09 mmt, according to data from China Customs Friday.  This leaves them near record in port stocks going into the timeframe where the US is competitive. Brazil's weak real currency results in record acreage estimated at 4.4% above last year. 

Ukraine's Ag Ministry stated the country has harvested around 87% of the crop, which is around 23.1 mmt of wheat, well short of year ago levels.

Argentina's BAGE lowered their estimate for Argentina's overall wheat planted area from 6.8 mln hectares down to 6.5 mln hectares due to drought.  Planting is 98% complete. 

France's AgriMer stated as of Aug. 3 wheat harvest was an estimated 99% complete vs. 90% week ago.  

DELIVERIES

Meal:  286

CALLS

Calls are as follows:

beans:  1-2 lower

meal:  steady

soyoil:  10-20 lower

corn:  1/2 higher

wheat:  2 1/2-3 lower

OUTSIDE MARKETS

Firmer crude at $41.96/barrel, and a firmer US dollar at 93.69.  Stocks are 96 pts higher.

BUSINESS

Egypt purchased 64,500 mt of soyoil in a tender over the weekend.

TECH TALK

• November beans continue to hit new lows, trading below the 100-day moving average of $8.68.  New lows beget new lows, and this price action opens the door to now test $8.59 1/2-$8.61.  
• December meal prices post a new ctr low at $286.20 but best support is at $284.50.  
• December soyoil futures trades back into major support at 3050c which is both trendline support and is the place where the 200-day moving average crosses.  Therefore, it would be extremely weak price action if soyoil were to break down below 3045c-3050c in December.  
• December corn trades into $3.20, which is down around a long term trendline support line.  Therefore, breaking $3.20 would open the door for a move down towards $3.15.  Price action seems to be stalled here, so would expect more price consolidation today as some shorts lighten up into the report.  
• September wheat prices start just above the overall low of this down-move at $4.90, but rallies will now find selling interest.  Could probably cover a short under the $5.00 level, though the chart does not offer up much stabilization.  However, wheat tends to cross back over major benchmarks, and after such a large move down think some upside retracement is more likely than down-side.  

DECEMBER CORN

The trading range for the moment is from $3.20 - $3.35, and the major trend is lower.  The contract low is $3.20, and prices seem to have trouble moving under this level as long-term support lines cross here from values that can be drawn back in April.   Prices begin close to $3.20, and it appears for the moment that consolidation is once again going to be a theme from this level up to $3.25.  For now, it appears that the down-trend has been interrupted, and if needing to price something should probably do so, though layers of resistance are still going to stop a larger rally.   In order for prices to print find a low, need to close back over $3.30, and keep the $3.20 level of support intact.  

ON THE CALENDAR

Export inspections at 10:00 and crop progress at 3:00 PM central time.

 

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