GOOD MORNING,

The markets are mixed this AM as rains continue to cross the Midwest capping off rallies.  China remains around the bean market with profit-taking in oilshare noted as traders buy meal/sell soyoil.  Soyoil markets are lower today along with a slightly weaker tone in energies and lower palm.  

Beans:   The feature in the soy complex is the stronger nearby bean inverse, as we head into first notice day next week.  July/Nov and July /Aug. hit new inverse highs as supplies remain tight.   China continues to be a key for bean prices, as US origin is still a great value compared to elsewhere, particularly Brazil. Poor Chinese crush margins and port congestion could slow the export pace, with sales due to be released on Thursday. Crushers continue to remain relatively quiet, though there are more rumors of Chinese inquiries this AM.  Additionally, China's bean buyers are asking exporters to sign letters guaranteeing their cargoes are not contaminated with coronavirus, which is seen perhaps as another stumbling block for trade. Tyson Food company was the first to sign Chinese documents stating their meat exports are free of Covid - 19.   

The Brazilian Real firmed 5% this month which has slowed the pace of farmer selling.  However, on this year's Brazilian Real currency weakness, according to Datagro, Brazilian farmers have sold 87.5% of their record 124 mmt 19/20 crop as of June 5, vs. the prev. record of 76.8% in 2016. 

Grains: Typically, corn should be well on its way to being a made crop, unless July turns hot and dry and casts a negative spell on what is currently a very healthy crop.  The lack of technical follow-through at the bottom of the charts continues to be problematic for the bear, as trading ranges continue.  Wheat prices attempt to stabilize but harvest proceeds and exports from Russian remain as scheduled.  

WEATHER

Weather maps remain awash in precip, with 7-day maps suggesting at least an inch for about 80% of the Midwest.  The 6/10-day and 8/14-day maps show an above average temperature reading but slightly higher chances of rain events.  Some weather watchers are looking for a ridge to form in early July, but at heart is whether it will have sticking power should it arrive.  For now, with enough rains around, call the weather picture bearish.   The weather outlook for July is positive with above-normal rains and no excessive heat.  

ANNOUNCEMENTS

Chinese customs data for May showed wheat imports during the month totaled 810 kmt, sharply higher than a year ago.  Year to date wheat imports through May have totaled 2.44 mmt, which is up 67% from year ago.

China's pork imports for May dropped from a record high while beef imports decreased to the lowest level in at least 6 months.  Pork imports fell to 370,000 tons from a record 400,000 tons in April, according to customs data.    

Brazil's ANEC export group said they expect June 2020 bean exports to touch 12.6 mmt, which is 400,0000 mt less than their estimate last week.  The group expected 3 mmt of soy to be shipped over the June 21-June 27 period.

CALLS

Calls are as follows:

beans:  mixed

meal:  80-1.00 higher

soyoil:  14-18 lower

corn:  1/2 higher

wheat:  mixed

OUTSIDE MARKETS

A weaker stock market, down 200 pts, with weaker crude trading down to $39.36/barrel.  The US dollar is firmer at 96.55.

TECH TALK

• November beans continue sideways between $8.65 / $8.85.  The bearish story about Navarro saying the trade deal is over vs. Trump saying it's on showed the bean range nicely.  Could straddle/strangle this level, though multiple tops at $8.80 seems stronger than the two recent lower support sell-offs at $8.65 on quick breaks.  
• July meal prices have trendline support today at $285.00 while resistance crosses at the 50-day moving average of $289.00.  If needing to price or cover a short, the $285.00 level is value right now.  
• July soyoil breaks 28c again and trades down to key moving averages located at 2790c.  A trade under this level is very negative and implies oilshare will see further losses.  
• Sep. corn is posting an inside day of trade between yesterday's low sell-off at $3.25 and the high trade of $3.32.   Trendline support now moves up to $3.26, and the chart is open to retracement again towards $3.35.  
• Sep. wheat is attempting to stabilize, and if short prices must stay under yesterday's high trade of $4.93.   However, better support has now formed from $4.81-$4.83, which appears to offer up a "v" bottom, and that could spark a better rally for a $4.80-$5.15 trading range.  

DECEMBER CORN

Overall trading range is from $3.30 - $3.48.  The price drop back under $3.40 to new lows of $3.34 1/2 opens the door to further weakness, and any trade under $3.34 1/2 turns momentum lower with a test of the bottom of the trading range at $3.30.  With the break this week, resistance now moves down to $3.41.  The trend is extremely weak with an ADX reading of only 18, (anything under 25 is a weak trend), which suggests that prices could continue to grind in the same space for now which is from $3.35 - $3.45.  Would note that the break below $3.40 did see a surge in volume, which was probably a combination of short-covering and commercial pricing activity.   Funds are net short 280K, and would not expect to see a pick -up in selling activity unless prices can break to the downside of $3.30, which opens the door for a much larger decline.  

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