GOOD MORNING,

The weather and a big report at the end of June are guiding price action but the news cycle actually triggered a larger break yesterday.  Better-than-expected crop ratings pressured corn prices but the overnight news stories pressured beans.   News outlets report White House advisor Navarro saying the China trade deal is over due to Beijing not sounding the alarm early enough over the coronavirus.   However, Navarro says his comment was taken out of context and President Trump confirmed this morning that the deal remains in effect. 

Chinese and US stocks dropped but came back after the clarification was made.  In the meantime, the back and forth comments also served to point out and define Ag trading ranges, as prices were able to bounce back.  Consumers of corn caught up on pricings as the market dipped, and recent bean business consumers took the break as an opportunity to get something covered in as well.  The other story regarding China and trade is that despite assurances by health experts around the world that Covid-19 cannot be transmitted via food to humans, China is insisting that bean exporters sign guarantees that their cargoes are free of Covid-19.   

Traders will begin to adjust positions into the 30 June Stocks/Acreage report, which is, (along with weather), key to the next price movement.  First notice day is also 30 June for July futures.    For the day, there are 11 Chicago wheat registrations, 511 meal, and 3,495 soyoil. 

WEATHER

An active rainfall pattern continues to cross most of the Midwest over the next 7 days.  The eastern Corn Belt will see some of the best precip., with the 4th of July ridge supposedly weakening. The 6/10-day and 8/14-day outlooks suggest above normal precip.  Shower activity will spread throughout the Midwest and down through the Delta, bringing some relief to many areas of the country.  Current weather is bearish.

REPORTS

Crop progress:

Corn:  72% good/excellent, up 1% vs. 56% g/e year ago.  Most were expecting ratings to decline.  In general, the western Corn Belt saw improvements while the eastern Corn Belt saw declines.  Ind., Ill., Ohio, and Michigan all declined by 4-8%, while Colorado, Mo., and Neb. were up 3-8%.  Silking:  2%.  

Beans:  96% planted,  70% good/excellent, down 2%. Emerged:  89% complete vs. 81% week ago and year ago at 66%.  Blooming:   5%

Spring Wheat:  75% good/excellent, 12% headed.

Winter Wheat:  29% harvested, vs. 13% year ago and 26% average.  Headed:  96% vs. 93% year ago and 97% average

ANNOUNCEMENTS

China imported 370,000 mt of pork in May, up 86% vs. year ago.  May pork imports were only slightly lower than April's record arrivals of 400,000 mt.  May beef imports were 140,000 mt, up 15% as of year ago.

As of June 11, China had 3.05 mmt of US beans booked for 20/21 delivery, which starts on Sep. 1.  Since June 11, China has booked at least another 390,000 mt of new-crop beans.  The USDA forecasts Chinese bean imports to rise 2% for 2020/21 to a new record of 96 mmt. 

CALLS

Calls are as follows:

beans:  3-5 lower

meal:  .20-30 higher

soyoil:  mixed

corn:  2 1/2-3 lower

wheat:  3 lower

OUTSIDE MARKETS

Higher stocks, up 300 pts, and firmer crude which trades to new highs of $41.59/barrel.  The US dollar sits at 96.77, and continues to unwind against a recovering Brazilian Real. 

TECH TALK

• Sep corn tops out at $3.39 and turns lower from higher, moving down through the $3.30 support level that held and under the 50 day moving average of $3.28 to a low of $3.25 3/4.  The break moves prices out of the slight up-trend and turns direction sideways.  Best support under the market is $3.23, with the base of multiple lows at $3.19.  The ability to bounce back to $3.30 shows some short-covering or buying interest at the lows which is more suggestive of trading range activity. 
• Sep. wheat continues to congest around the $4.83 level with double highs at $4.90.  If short, would elect to cover something in, as any trade over $4.90 will find a possible correction and retracement of upside range with trade to $5.05 first, and $5.15 at the top. 
• November bean prices break to $8.65 and bounce as well, which is part of a trading range chop.  Could continue to straddle/strangle Nov beans from $8.65-$8.85, but any trade under 8.65 would take prices back to $8.55. 
• July soyoil prices turn lower to test very important support at 2790c which is where both the 20-day and 50-day moving average converge.  Prices recovered nicely from this level, and if short would have to use this level to cover something in or try the long side of the market. 
• July meal pulls back to test key support at $285.00 which is under the 20-day moving average of $287.00.  If needing to price something, this is still a favorable level to do so. 

SEPTEMBER WHEAT

Prices are attempting to now find a bottom, and could be heading into a $4.80-$5.15/$5.20 trading range.  On another break under $4.80, trendline support is close by at $4.77 should we go there.  The chart has not thrown off a good reversal signal, but if prices are beginning to congest at lower levels of trade.  If short and the market trades back over $4.91 would elect to get something cover, or even try the long side to play the possible trade towards $5.15. 

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