GOOD MORNING,

Prices are firmer this as temperatures next week are forecast to be hotter than this week. Rains are crossing parts of the Midwest, but it is not a soaking event that alleviates all dryness.  Spreads are mostly firmer.  

The wheat rally continues as more shorts cover, which is providing spillover strength to corn.  World wheat production numbers may decline in tomorrow's USDA report.  Added to the list of lower production from France, Russia, and Ukraine is Argentina.  Argentina's Rosario Exchange stated that they may reduce 2021 crop estimates by 6.5 million hectares due to dryness.  Britain's wheat is down 25% after a wet fall forced farmers to switch to other crops.  Funds remain short corn and wheat, and would expect to see further strength on position- evening.  

Other early trends include weaker oilshare as meal continues to gain on soyoil.   

WEATHER

Weather forecasters took away rain from the US in the second week, with precip next week in the north, and the lower half getting short amounts only.   Net drying in the next 10 days beyond this weekend could bring short-to -very short topsoil moisture levels unless rainfall hits.  Crop stress is forecast to rise into July 25.   Early corn pollination for now will be OK with scattered rainfall, but it is not well distributed.  Bottom line:  weather is friendly and markets are adding back premium.   

REPORTS

Export Sales:

beans:  19/20 net 952,200 tmt and 20/21 net 382,100 tmt  (vs. an expected 700-1.8 tmt)

meal:    19/20 net 124,400 tmt and 20/21 net 73,400 tmt (vs. an expected 75-300 tmt)

soyoil:   19/20 net 28,900 tmt (vs. an expected 5-30 tmt)

corn:     19/20 net 599,200 tmt and 20/21 net 409,300 tmt   (vs. an expected 450-1.1 tmt)

wheat:   20/21 net 326,100 tmt (vs. an expected 200-550 tmt)

Wheat: low end and sales disappointing with cheaper offers overseas taking much of world demand.  

Corn:  high end for both, with China accounting for 407K old which was part of the rumor mill.  Other demand traditional buyers, but cheaper offers are now coming from SA and Black Sea.

Beans:  high end as China purchased 461.4K with old at 192K.  

Meal:  sales routine at best with virus hindering demand.

Soyoil: sales in the middle with 19K going to unknown. 

ANNOUNCEMENTS

China's National Grain Trade reported that 3.970 mln mt of corn was sold from state reserves at auction today, which was 100% of the total offered.  

Argentina's BA Exchange forecasts 19/20 corn production at 51.5 mmt, up 500,000 mt vs. mo ago.  Corn harvest was estimated at 86.4% complete.  

China's slowing pace of meat imports, thanks to new coronavirus measures, will provide further support for prices already higher on severe shortages of pork.  Purchases of pork and other meats soared after production shrank by 30% following the outbreak of African Swine Fever.  

DELIVERIES

Oil:  61

Wheat:  84

CALLS

Calls are as follows:

beans:  7-9 higher

meal:    3.50-3.80 higher

soyoil:  4-9 higher

corn:  4-6 higher

wheat:  3 1/2-5 higher

OUTSIDE MARKETS

Crude oil prices at $40.99/barrel, with the US dollar down to 96.23, and stocks 47 pts lower.  

TECH TALK

• November bean prices are sideways congesting around the $9.00 level.   Support continues to move higher, and pullbacks are buying opportunities in a market that looks to remain firm.  Prices turn higher from lower this AM which suggests a return to test the 200-day moving average of $9.12 1/2.   
• December soyoil prices set a new high close to 30c before breaking to test 29c.  If short would probably take a profit and try the long side of this market, which could target 30c or higher.  
• December meal prices rally back to key resistance at $305.00-$308.00.  Prices held key support on a pullback to $300.00 yesterday, and any move over $308.00 will trigger buy-stops and target $312.00/$315.00.  
• December corn fell to $3.47/$3.48, which was previously tough resistance, now turned into key support.  The trade over $3.50 suggests that the market is likely to take another run at double highs at $3.63, a current top.  However, the market has not yet proven it is a top that can hold, as prices need to probably settle under $3.40 to return to lower trade.  
• Sep. wheat broke to the upside of its ascending triangle yesterday targeting first resistance at $5.15, but quickly moving over that to trade towards the upper part of the trading range from $5.25/$5.30.  Given the quick ascent would look for the market to find the 100 day moving average of $5.26 tough to move through on a first rally, but as in other markets good support could move up to $5.00/$5.08 on a break.   

NOVEMBER BEANS

Overall trading range has been bumped higher, and is now from $8.80 - $9.13. For the day the 200-day moving average once again returns to $9.12 3/4, which found prices setting back on a first time run.  However, returning to resistance (and support) lines over and over increases the chance for a break-through.  While the bottom of the trading range has good support at $8.80, the upper end of this rally does not appear to be complete.  Any move through $9.13 would increase the chance for a new leg higher from $9.25/$9.28.  The ADX trend is slowly strengthening as prices work upward, which is also net positive.  While prices are approaching overbought territory, it's not significant enough to warrant a larger break.  Look for further strength ahead.

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