GOOD MORNING,

Prices continue to trade mixed, with the major direction for most of the markets sideways to lower.  Funds are now estimated to be short 8,000 wheat contracts, 175,000 corn, and 24,000 meal.  Funds are estimated to be long 55,000 bean contracts and 54,000 soyoil.

Into the August 12 WASDE, we will continue to see the usual trade estimates.   Another firm forecast bean yield at 52.5 bpa, putting production at 4.352 bln bu.  2020 corn bpa was forecast at a more modest 179.6 bpa, with production at 13.617 bln bu.   

The bull component of trade continues to be that of strong oilshare, with soyoil futures on a higher path backed by higher crude and strong world veg oil values.  Soyoil futures and oilshare are higher this morning with soyoil sprinting back towards yesterday's new trading range highs.  

Grains remain mixed with corn attempting to put in a double bottom.  Cash is firm as farmers selling in the US, Argentina, and Brazil remain slow.  Wheat charts hit a target low this AM and bounce after an extensive break.  US cash wheat offers have been firming week over week implying that there is more demand around.   As to the August 12 report, traders expect to see an increase in production, but nothing major.  Should be more of an event for beans and corn than wheat futures. Egypt purchased Russian and Ukrainian wheat in its tender this week.  

Tensions between China/US remain high with talks scheduled for August 15.  China remains behind the pace needed to achieve the Phase One deal. There was talk that yesterday China purchased 6/8 US/Brazilian cargoes.  However, they need to purchase 6-7 cargoes each day to reach the USDA goal of 96 mmt.  

WEATHER

Weather remains bearish with more rainfall for the 6/10-day period when the GFS model shows a ridge of high pressure across the Midwest.    Mostly dry through the balance of the week for the west and the eastern Corn Belt.  Temperatures will return to above normal next Monday - Friday.   Dryness concerns remain in Iowa.  Weather remains bearish.

REPORTS

Export Sales:

Beans:  19/20 net 345.200 mt and 20/21 net 1.41 mt  (vs. an expected 800-1.7 mt)

Meal:    19/20 net 328,300 mt and 20/21 net 203,900 mt  (vs. an expected 300-750 mt)

Soyoil:   19/20 net 24,400 mt and 20/21 net 11.100 mt  (vs. an expected 5-35 mt)

Corn:     19/20 net 101,600 mt and 20/21 net 2.6 mt  (vs. an expected 2.1- 3.2 mt)

Wheat:   20/21 neat 605,500 mt and 21/22 net 5,000 mt (vs. an expected 200-800 mt)

Post sales, prices rallied into the close.  

Wheat:  Mid-range sales sold for the week.  The market still faces stiff competition from Russia, Brazil, and Canada where crops are larger than expected.

Corn:  Big sales from China account for 1.937, routine business without China with sales to Mexico.  Ukraine and SA corn values are cheaper

Beans:  Mid-range old but larger than expected for new with China accounting for 474K and Mexico 352K.

Meal:  Mid-range with good sales to the Philippines and Spain the large buyer of new at 94K

Soyoil:  Better sales as tightening supplies and production estimates.  World demand remains firm for oils and should continue to see good demand moving forward.  

ANNOUNCEMENTS

China's National Grain Trade Centre reported 3.999 mmt of corn was sold from state held reserves into the marketplace, which was 100% of the volume offered.

Ukraine's ProGro revised its domestic 2020 grain harvest forecast to an all-time high of 76.15 mmt vs. the prev. estimate of 74.23 mmt.  

World food prices rose in July led by veg oils, dairy products and sugar, extending a rebound from the prev. month following sharp falls triggered by the coronavirus.  

CALLS

Calls are as follows:

beans:  1-2 higher

meal:  .30-.50 lower

soyoil:  25-30 higher

corn:  steady

wheat:  1-2 higher

OUTSIDE MARKETS

Lower stocks down 80 pts, weaker crude at $41.61/barrel, and a slightly firmer US dollar at 92.52.  Gold prices are at $2056.20/oz.

TECH TALK

• Seasonally, beans have a tendency to decline in August/Sep along with corn; grains tend to find their lows in Sep. 
• Dec. corn put in a nice bounce back towards $3.25 as prices congest at recent lows.  Trendline support is close to $3.17-$3.19, but could be harder to achieve as the trend is down but not strong.  Dec corn has strong resistance from $3.25/$3.28 and would look for it to stall should we go there.  
• November beans post a new low at $8.75 1/4 for the corrective down-move, but the rally back towards $8.80 could generate more buying.  If $8.75 holds for the day, would look to begin to retrace back towards $8.90.  
• December soyoil once again shows its strength, setting new highs this week at 3178c, setting back to successfully test 31c, and rebounding today into resistance from 3150c-3178c.  Target high is 3212c, and would look to head there.  
• December meal prices struggle to stay in the green with values nearly close to ctr lows of $287.50.  However, the market has managed to hold over the last months at this level.  If needing to price something, the decline via oilshare spread activity is a nice opportunity to do so.  
• Sep. wheat prices finally push to a new low of $5.05 with a nice rebound, posting an outside day closing higher into the day session.  This could be good enough to generate a short-covering bounce back that takes us into the middle of the range towards $5.25/$5.30.  If short, would cover something in or try the long side given the set-up this AM.

DECEMBER CORN

Funds are short and prices continue to post new contract lows.   Strong trendline support crosses below the market in red, and crosses at $3.17-$3.19.  The market may fight to get there, and for the day appears ready to test resistance from $3.25/$3.26.  Prices would have to move above $3.30 in order to find a bottom.  For the time being, would look for a rally into $3.25/$3.28, but funds may jump on the market and sell it there.  Could potentially work into a $3.15-$3.30 trading range but feels like the last part of the down move could be a slow grind.

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