NOTE: Technical Perspectives from WPI will not be published on May 28, 2021.

Good morning - 

Prices traded higher overnight led by soyoil, which stabilized bean trade. Soybean bull spreads are working again, finding support after Monday's selloff. Morning trends feature beans gaining on corn, and soyoil on meal, as traders buy oilshare. 

Demand for corn and beans remains good. Corn needs to average 61 Mbu of exports per week to match the USDA projected 2.775 Bbu forecast, while soybeans need just over 15 Mbu weekly to match USDA's 2.280 Bbu. Wheat exports stand at 917 Mbu with the USDA projecting a 965 Mbu export program, which could fall short.  World cash basis levels are steady/firm for corn, but soybean premiums in Brazil are lower. Chinese crush margins are in the red, which is slowing some bean buying. 

European wheat values are lower, with the world uncertain about Russian prices. 

STORIES

China has been on the move to contain commodity prices. China stated they would strengthen price controls on iron ore, copper, corn and other major commodities in its 14th five-year plan from 2021-2025 to address abnormal fluctuations. 

WEATHER 

U.S. weather is warm but will shift to feature cooler conditions mid-week, which could persist through the first week of June. Close to 1 inch of rain is expected for many parts of the U.S., with Crop Watch 2021 stating that up to 1 inch could hit parts of Illinois, Iowa, Nebraska, and Kansas. Western Iowa needs more rain along with Ohio. Minnesota received more than 3 inches of rain in the last few days after a historically dry April and May. 

Brazil continues to pick up showers in the very south but cannot help what has already been lost. 

Gist of the weather is bearish.

REPORTS

Crop progress: 

• Note: conditions ratings will start next week. 
• Corn: 90% planted vs. expected 91%, Emergence: 64%, with Kansas and Colorado behind. 
• Soybeans: 75% planted vs. 61% week ago and vs. 5-yr average of 54%.
  • Illinois is 80% planted vs. 53% on average, Iowa at 89% planted vs. 66% average. Louisiana lags the pace at only 58% done vs. 85% on average. Emergence: 41% vs. 25% for the 5-year average.
• Spring wheat: 94% planted and 45% rated good/excellent.
• Winter wheat: 67% headed vs. 69% average. Good/excellent rating fell 1% to 47%.
• Progress report was negative, but probably now factored into prices. 

From NASS:

NASS announced in the first two weeks of June they would gather information about this season's crop production, supplies of grain in storage, and livestock inventory. This information will help producers, suppliers, traders, buyers, and others to make informed business. The result will be available on June 24 in the Hogs and Pigs report and on the June 30 Acreage and Stocks report. 

ANNOUNCEMENTS

Australia's wheat crop could be a record as good weather in April and May have helped to boost soil moisture levels. The state weather bureau recently placed an 80% chance that over the next three months above average precipitation would be seen in key growing areas of Southern Australia and New South Wales, with average rainfall in Australia, the largest wheat producing state. 

Calls are as follows:

• beans: 8-10 higher
• meal: 1.8-2.20 lower
• soyoil: 80-90 pts higher
• corn: 3 1/2-4 1/2 lower
• wheat: steady/mixed
• Nov. canola: 1.00 lower

Outside markets have crude oil prices trading lower to $65.41/barrel, and the US dollar falling to 89.53. The stock market is 80 pts. higher.

Tech Talk

July soyoil established double lows at 6450c last week, and the bounce over 66c sets the market in motion to rally again. Though sell-stops were triggered under 6450c, the market did find its footing and a nice bounce in re-establishing its uptrend. Look for prices to now target 6750c to 68c. 

Jul meal prices test $395.00 with a low of $396.00, and once again appears ready to keep hold of this level as value. The market lows appear ready to receive another test, however, as meal prices are once again back under $400.00. Continue to scale-down price towards $395.00 and keep some aside in case this major level is violated. 

July beans build on gains over $15.15, turning higher from lower.  This is the first start to trading range activity and would look to target $15.50/$15.55 high end. Likewise, it appears that November beans established a trading range at $13.40 and is ready for retracement towards $13.80. Would view this as a likely range heading into the 3-day weekend.  

July wheat prices found its downside target of $6.55, and as if typical of this market is now trading between the 50-day moving average of $6.70 and the 100 day at $6.65. That still does not represent stability despite the bounce, and would need a close back over $6.75 in order to do so. Would look for another possible leg lower, and a likely test of $6.55 again. 

July corn is congesting in a triangle pattern at the bottom of the large break from last week, trading between major support at $6.35 and major resistance at $6.70. The ADX trend has weakened so would look to move sideways from $6.35 to $6.75. For now, would prefer to own breaks rather than to be short, particularly if the market moves to the upside of $6.80 where there is no back resistance to stop a further rally. 

December corn closed its small down-side gap from yesterday with trade at $5.43, but that now becomes resistance as prices begin lower on the day. Look for any pullback towards the 50-day moving average of $5.26 as a buying, pricing, or short-covering opportunity for now should we break down there. 

JULY MEAL: A weaker trend sends prices down to major support and monthly lows at $395.00, a level that has held since last March and appears ready to do so as well again. The market is trending towards oversold, but not significantly so to warrant a major upward correction. Prices turn higher from lower, and back over $400.00, but still need to trade back over the downtrend channel on the chart at $410.00 to stabilize. Still, if needing to price this downturn is presenting a good opportunity to do so, given that prices have been on the cusp of breaking down before. The ADX trend at 28 denotes weak trend, so buyers should be heads up.

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