GOOD MORNING,
It is report day and all the markets have been on good rallies. Report time is 11:00 central. The crop yields are not expected to change much, as this report typically does not reflect such historically. The lower and surprising June acreage numbers will be incorporated into today's report, along with adjustments in demand that might offset the bullish production number. Feed/residual may be lowered as well. Corn exports may be lower due to stiff competition from SA and Ukraine.
WEATHER
The 6/10- and 8/14-day outlooks appear to offer less water and hotter temperatures. Prices are responding to better rainfall chances for the weekend, but extreme heat is advertised for next week. Most areas have adequate soil moisture for now, but next week Wed- Friday will see temperatures well to above normal which could create a drawdown of topsoil moisture.
The US Climate Prediction Center forecast the chance of La Nina developing into the fall at 50/55%, with a 50% chance it would persist through 2021. Dryness concerns are already impacting Argentina's wheat growing areas, with the southern US Plains also trending drier this year.
ANNOUNCEMENTS
China forecast higher corn and bean imports for 19/20 in order to fulfill the phase one trade deal. Corn imports for the crop year that ends in Sep. are forecast at 6 mmt, up 2 mmt from mo ago. Bean imports were increased to 94 mmt, up 3 mmt from mo ago.
Russia's 2020 grain harvest is forecast at 122.5 mmt, as reported by the agriculture ministry, including 75 mmt of wheat. Russia's grain exports for 19/20 are forecast at 43 mmt. USDA has Russian wheat crop at 77 mmt.
Outbreaks of deadly African Swine Fever are surging in southern areas of China following heavy rains, analysts and industry sources reported, in what could be a setback in replenishing pork supplies.
French consulting FranceAgriMer reported that farmers had harvested around 10% of the wheat crop vs. 4% a week earlier.
DELIVERIES
soyoil: 14
wheat: 5
CALLS
Calls are as follows:
beans: 1/2-1 lower
meal: .20-.50 lower
soyoil: steady
corn: 1-1 1/2 lower
wheat: 1/2-1 lower
OUTSIDE MARKETS
Outside markets include weaker crude at $38.54/barrel, as economies struggle with more virus episodes. The US dollar trades to 96.62. Stocks are down 125 pts.
TECH TALK
- November beans are in a congestion stage around the gap-fill area of $9.03, posting another inside day of trade. Prices remain very close to recent highs which is more friendly than negative. However, any trade now back under $8.95 will also trigger more profit-taking. The recent up-trend has strengthened and traders will continue to want to own good pullbacks.
- December meal congests from $301.00-$308.00 but this chart appears to be forming new resistance from $305.00-$307.00, which could portend a larger break back towards the 100-day moving average of $300.50.
- December soyoil prices slip under key support at 29c to trigger sell-stops to new lows at 2866c. This is a level which marks previous lows and converging lines of support are located at 2832c. If short, would elect to scale down cover and try the long side of this market, as prices recently closed a gap at 2964c, new highs.
- December corn is sideways at the top of the current trading range moving from $3.45-$3.63, double tops. The 100-day moving average is located at $3.51 and if short would probably elect to cover something in should prices go there. Better support on a break of $3.50 is located at $3.45, and for the day it could hold as long as the report is not overly bearish.
- Bears are carefully watching the Sep. wheat chart, as prices neared key levels of resistance from $5.30-$5.33. If wanting to sell this market, would have buy-stops very close by as any trade over $5.35 could lead to a new leg up.
SEPTEMBER WHEAT
The market hit monthly lows at the end of June with trade down to $4.71. Overall key support once again returns to $5.00 with the rally, (courtesy of an ascending triangle at the bottom of the chart in blue), which took prices to key resistance which is from $5.30/$5.33. Drawing a Fib retracement level from market highs of $5.70 back on April to the current ctr low of $4.71 results in the following levels:
38% - $5.08 (done)
50% - $5.20 (done)
62% - $5.33
The strength of the market suggests that a seasonal low is in place, but values at this level are approaching stiff resistance in that they are close to a top peak and a 62% retracement. If long, would probably lift part of it and keep the rest in case prices can trade beyond $5.35, which is also the 200-day moving average. It would also be very bullish for prices to be able to trade above all this resistance, (200-day, trendline resistance, and a 62% Fib at $5.33), so if wanting to sell this market would be patient as a move above all this could take prices towards $5.45/$5.50 quite easily. Trade above $5.35 would trigger a new leg up, and any trade over a 62% Fib would clear the way for short-covering and new buying. Current trading range is $5.00-$5.35.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America