GOOD MORNING,

Prices are mixed this morning with higher oilshare and soyoil and firm wheat, vs. weaker beans, meal, and corn.   Traders were busy unwinding previous oilshare values this week on the back of the Administration's delay to defining biofuel mandates, but that correction seems to have come to a conclusion this morning.  Traders are also unwinding previous buy bean/sell corn spread trade, and buy wheat/sell corn.  We will know the fund positions this evening when the commitment-of-traders report is released.  It is estimated that funds are even to slightly long wheat, long 220K corn, long 80K beans, long 20K meal, and long 50K soyoil.  

There is some chatter that China has been looking at US beans, while also making inquiries for US HRW.  No trade confirmations so far.  US beans are the cheapest late September forward, and would note that China started their buying program in late July and August year ago.  As of this moment, China's last purchase was June 24 when September futures were closer to $12.50.   China's crush margins still need to move out of the red, but when they do look for them to likely come for US origin.  Interesting to see a Reuters article today that stated that China's bean imports were set to slow sharply in late 2021 from a record first-half rally, which goes against the notion of sustained growth. The article stated that a collapse in the hog sector and a rise in wheat feed seems to be behind the thinking, as the government changed the feed mix to include more wheat and rice instead of meal.   One manager from a Chinese crusher stated, "meal demand is at rock bottom, with the basis in northern China the lowest this year".  China imported a record 48.95 mmt for first half 2021, up nearly 9% on the year as hog herds recovered.  

World cash markets remain firm with more strength in domestic Brazil corn prices.  Strength in South American corn premiums may eventually translate to US corn business.  For now, corn retains a negative seasonal and traders are waiting to add to long positions, looking for a better export picture to emerge.  Latest private yield estimate for corn was released at 181.3 bpa, and is at the higher end of guesses.  The market seems to be trading the chatter for record yields in the eastern Corn Belt and dialing it into price action.  Good crops are noted in the central and eastern parts of the Corn Belt, while concerns continue for the Northwest, PNW, and Northern Plains. 

Wheat continues to benefit from a variety of factors, including continued digestion of bullish June 30 acreage numbers.  Export sales have been better, showing that demand is around.  Production wheat estimates out of the Black Sea have been falling, while Argentina wheat areas now are impacted by drier weather.  Technically Chicago wheat still remains fairly close to the top end of its recent higher range. 

WEATHER

--Forecasts next week looked less threatening on Thursday, with some abatement of heat and better opportunities for rain.  However, the Dakotas are going to see triple digit temperatures this weekend. The 11/15-day outlook brings well above normal temperatures with a barrow band of rain in the west moving eastward through the 6/15-day period.  Rains in Canada brought relief to parched wheat and canola crop areas this week, but was certainly not a drought buster.  Weather remains mostly friendly, though one can see that even a small rain event fuels selling.  This weekend will be warm and dry across US HRS areas.  

--Continued frosts/freezes in Brazil sent coffee futures sharply higher and has already impacted the Safrinha corn crop.  Question now is by how much.  Henan province in China will continue to see unwanted rains over the next 2 days, while western Europe deals with excess rainfall amounts as well.  Black Sea wheat areas could use more rain. 

ANNOUNCEMENTS

China's Commerce Ministry said they expect the last half of 2021 foreign trade growth to slow compared to year ago levels.  The ministry said increasing raw material prices and issues with shipping logistics will tighten trading company margins.  

China's Sinograin sells 8,207 tons of imported GMO corn at an auction of state reserves, or 4% of the offer.

French soft wheat conditions were worse again, while wet weather prevented harvest from continuing.  France's AgriMer reported that 75% of the soft wheat was rated good/excellent vs. 76% week ago.  Harvest is at 14% vs. 4% week ago, and vs. 67% year ago.

CALLS

Calls are as follows:

beans:  3-5 lower

meal:  3.80-4.20 lower

soyoil:  70-80 pts higher

corn:  mixed/lower

wheat:  1/2-1 higher

OUTSIDE MARKETS

Crude oil in the red at $72.11/barrel, with the US dollar firmer to 93.02.  

TECH TALK

• Bean trade remains heavy with rallies failing which is producing more profit-taking.  In the big picture, we have merely traveled from $13.25 lows to $14.25, and the chop back-and-forth trade continues.  Look to price, cover a short, or go long on another break to $13.45, which should hold as it is near the 100-day moving average of $13.25/$13.30, and still prefer to own breaks for the long term.  
• December meal is back and forth from $355.00 to $385.00, reacting merely to spread trade and oilshare.  Still cannot trust a rally here, as prices sit still at the lower end of trading ranges.  Dec. meal begins on trendline support today with its low of $361.30.  If needing to price, could be patient for a likely break to $355.00, particularly if we violate $360.00 at the open.  
• December soyoil found its support at 6058c for a nice recovery bounce.  Prices are now back at 63c, but any move over this level will find prices rallying back towards 65c again.  Look for Dec soyoil to have now confirmed its 60c to 66c trading range, and perhaps pivot around 63c to 64c.  
• December corn prices are sideways, but on the chart each break has been higher than the last, creating a bit of an ascending triangle which is friendly.  The overall trading range is from $5.45 to $5.75, and top trendline resistance today on a trade higher from lower would be $5.75.  
• December wheat prices printed a low at $6.91 on a correction from the rally to $7.26 3/4.  Think this rally is not over, and the settlement back over $7.00 strongly suggests we retrace the break for a $6.90 - $7.25 or higher trading range.  Could likely own the market today for higher trade if we settle over $7.00 for a rally up towards $7.35.

DECEMBER CORN

Compact trade in this market as major movement is sideways, but breaks are holding at higher levels than before.  The gap-fill would be complete with trade to $5.73 1/2, and the ascending position of the market, outlined by the rising blue trendline, suggests that we may fully fill the gap in time.  The trend ADX is extremely weak at 12, (anything under 25 is a weak trend), so would not expect a resumption of a higher trend until prices can close above $5.75.  Think at the very least we will get there before we see more downside price action below $5.45.

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