GOOD MORNING,
Prices are mixed featuring higher soy and corn, lower wheat. Could it be a foreshadowing of themes to come for the day? The June WASDE will be released at 11:00 central time, and after we take a look at the numbers we will be back to watching the weather and preparing for the more dominant June 30 Stocks/Acreage report. Traders are looking for more friendly corn numbers, and neutral wheat/beans. Talk of higher 20/21 corn demand offers good support, and feed demand remains firm.
Beans chop sideways with more liquidation ahead of the report, and lower basis levels and index fund rolls adding weight to prices. Soyoil prices recovered per usual after breaking back in the July contract to test 70c which held for a move back over 72c. The fan-favorite trade to buy soyoil/sell meal continues. Meal prices break down as soyoil prices recover, and beans follow soyoil.
Wheat prices remain the weaker trade as clear competition continues from the Black Sea, though there were a few more tenders around on the break.
WEATHER
--Rains have now crossed areas of the Dakota's with decent coverage, but the continuation of that precip is the most important factor. Forecasters now have a return to hot and dry again after this week's rain event, and a general consensus that more rains are needed. The northern and western areas are warm and dry, with the central Midwest also turning hot and dry until we reach the 11-15 day outlook. Southern areas have seen heavier rains with localized flooding.
--Brazil has dryness in 1/4 of the areas continuing to draw down yields. A few southern areas pick up showers.
Gist of weather remains friendly as outlooks ahead are still not offering any drought busting rains.
REPORTS
Export Sales
beans: 20/21 net 15,700 mt and 21/22 net 105,000 mt (vs. an expected 20/21 minus 100,000 mt to 200,000 mt and 21/22 net 100-400,000 mt)
meal: 20/21 net 136,300 mt and 21/22 net 3,900 mt (vs. an expected 20/21 net 100-300,000 mt and 21/22 net 0-50,000 mt)
soyoil: 20/21 net 3,900 mt (vs. an expected 20/21 net minus 10K to 16,000 mt)
corn: 20/21 net 189,600 mt and 21/22 net 26,400 mt (vs. an expected 20/21 net 100-500,000 mt and 21/22 net 200-600,000 mt)
wheat: 20/21 net minus 1,400 mt and 21/22 net 325,900 mt (vs. an expected 21/22 net 200-450,000 mt)
Sales were expected to be low, but for corn and beans was extremely disappointing. Meal and wheat sales were slightly better than expected. Not much reaction and any weakness was purchased.
Wheat: 21/22 sales started in June 1, were primarily for South Korea and the Philippines and Mexico. Cheaper offers are elsewhere globally. Feed demand remains active.
Corn: 20/21 down 64% from week ago, and 39% from 4-wk ave. 21/22 sales were primarily to China for 542,500 mt
Beans: 20/21 down 12% from prev. week and 75% from 4-wk ave. South American offers are cheaper on the back of large production. China is said to be around the market, however, for new crop.
Meal: 20/21 down 37% from prev. week and 20% from 4-wk ave. Increases for Mexico
Soyoil: up noticeably from prev. week and from the 4-wk ave. but cheaper offers elsewhere globally.
ANNOUNCEMENTS
Brazil's corn conditions increased from 35% poor to very poor from 23% week ago.
Global food import costs are expected to rise 12% in 2021 due to surging commodity prices and returning robust demand during the Covid 19 crisis, the UN food agency announced. The FAO reported that the world's food import bill, including shipping costs, is projected to reach $1.715 trillion this year, from $1.530 trillion in 2020.
Strategie Grains raised its monthly forecast for 2021 soft red wheat harvest and exports from the EU next season due to improved competitiveness on the world market, but lowered them for the current season.
CALLS
Calls are as follows:
beans: 8-10 higher
meal: 1.10-1.40 higher
soyoil: 40-50 higher
corn: 6-7 higher
wheat: 5-6 lower
OUTSIDE MARKETS
Feature higher stocks and weaker crude which trades down to $70.30/barrel. THe US dollar trades up to 90.28.
What to expect at the open? Good close except for wheat, look for upside follow-through at the open, and perhaps for wheat to jump into the plus column as well.
TECH TALK
- The July corn chart is working higher, with minor resistance located at $7.02. The sideways to higher price pattern is more friendly in nature, suggesting the likelihood that we move through this level and up into the next resistance level at $7.15. Pullbacks to $6.85 should hold for an upside exit. Given the chart set-up and price recovery over the week, look for prices to likely head over minor resistance and into the $7.10 level. December corn prices also rally into key resistance from $6.15/$6.18. Though moving through here has failed before, continuing to rally back improves the chance that we go higher through this level and possibly re-test contract highs at $6.38.
- July beans walk it back to test major support at $15.50 which holds and is again defined as a major support low in a market that could work back over $16.00. We are in price consolidation mode here, but would still prefer to find places to own for more upside. November beans also recover after streaking to new contract highs at $14.80 earlier this week, test $14.25, and firm back again. Major direction is sideways/higher, and the placement of a fresh high likely suggests that technically we could still place another.
- July meal remains the weakest market turning down into the major support zone from trendline support at $383.00 to $385.00. Could price against this level, as we are not far away from the lows of the move at $378.30. However, if the rest of the markets pick up speed to the upside, meal will follow.
- July soyoil futures are in consolidation mode from 71c to 72c, but also placed a recent contract high at 7374c. Since there is no clear reversal signal, and fresh highs have been placed with a strong uptrend, would consider breaks to 70c /71c as buying opportunities for a market that could work higher still.
JULY MEAL
Bears are clearly in control of this market as the rally towards $406.00 is quickly snuffed with a deeper pullback towards the lowest end of the trading range located at $378.30, but trendline at $382.50 to $ 383.00. If needing to price something, could scale-down price from $388.00 to $383.00, where trendline is located. The ADX is weak at 20, meaning follow-through to either side is not evident. Though prices are trending towards oversold it's not enough to suggest that we are "stuck" at the bottom, or to find the need for a short-covering rally. If the other markets work higher after the open, meal will follow, albeit reluctantly.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America