World Perspectives
feed-grains soy-oilseeds wheat

PM Post - Adjusting to New Inputs

THE OPEN

November beans:  4 higher

December meal:  1.90 lower

December soyoil:  37 higher

December corn: steady

September wheat:  7 3/4 lower

Prices opened mixed with traders continuing to buy soyoil/sell meal, and buy corn/sell wheat.  Beans were higher supported by stronger soyoil values.  Soyoil continued to see support from higher crude, palm, and canola prices.  Wheat futures traded 

At 10:00 export inspections were as follows:

beans:  551,543 mt vs. 504,645 mt (vs. an expected 375-700,000 mt)

corn:    716,127 mt vs. 840,796 mt (vs. an expected 700-1.15 mt)

wheat:  500,110 mt vs. 544,010 mt  (vs. an expected 450-675,000 mt)

Inspections were neutral to bearish for grains, neutral for beans.  

SOY

  • The feature in the soy complex was that of higher soyoil vs. a weaker meal trade.  Traders continue to own soyoil and oilshare.  Sep. oilshare traded towards the 35.0% level with a high of 34.93% as meal prices broke lower.  Soyoil prices are trying to keep up with palm oil, which traded higher on the back of strength in world veg oil cash trade.   Crush values traded down to 83.33c/bu.  November bean prices maintained a steady trade for most of the morning following soyoil's firm tone as it continued to trade to new highs.  Spreads were weaker as August beans lost to November on spread liquidation.  August/Nov traded back to even from a 5c inverse, while Sep/Nov beans widened out to a 4c carry from 2c.  August beans will expire on August 14.   

GRAINS

  • Wheat prices continued to see profit-taking and selling by the funds as Russia's wheat production was raised while their prices were lower.  Additionally, Australia's wheat growing areas of concern are narrowed down to only 15%, with estimates for Brazil's wheat crop perhaps close to a record.  Technically the Sep. wheat contract is being challenged today as prices could not take out and sustain trade over the 200-day moving at $5.36.   Wheat export inspections intensified the selling pressure as US origin continues to find a place that would be competitive.  
  • December corn prices followed wheat lower but found a better round of pricing interest or bargain hunting as prices trended back towards $3.25.  Sep/Dec corn moved into 10 1/2c from lows of 11c.  Intermarket spreads were active with Sep wheat/corn moving down to 2.06 1/2c from 2.13 1/2c.  
  • Later in the session Sep. wheat triggered sell-stops after prices moved through the 200-day moving average of $5.23.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                             HI                           LO

Nov beans: 2 higher                                      8.99 3/4                   8.91 1/4

Dec meal: 2.00 lower                                     298.00                     294.40

Dec soyoil: 49 higher                                    3137                        3065

Dec corn:   1/2 lower                                     3.29                         3.26

Sep wheat: 10 lower                                     5.28 1/4                   5.1

OUTSIDE MARKETS

The Dow opened 120 pts higher, and was up 220 pts point by midday on better than expected economic numbers.  US manufacturing numbers improved in July to 54.2 vs. June at 52.6.  Crude oil traded to new highs of $41.22/barrel, while the US dollar was firmer at 89.99.

CLOSING COMMENTS

The USDA August WASDE is on August 12, and it will contain a farmer survey.  Ideas are circulating of yields that are over 180.0 bpa for corn, and 50.0 bpa for beans.  Only 10-15% of the crops are now under stress, with the majority of that confined to parts of Iowa.  

Corn continues to grind lower as traders expect to see an August report that could see higher carry-out due to larger production and continuing weak ethanol demand.  End-users wait patiently for lower prices, and funds are not in a rush to cover, having an already reduced position.  

As a reminder, USDA census crush for June will be out at 2:00 PM.  Advertised estimates:  crush at 177.8 mln bu and soyoil ending stocks at 2.336 bln lbs vs. 2.447 bln lbs in May.  

Crop progress is expected to show corn and bean ratings steady to slightly better, already factored into price action.

What to expect as far as trends go?  Doesn't feel like the soyoil rally is finished, which could imply further strength ahead for beans.  Corn may try to follow.

FYI DEPARTMENT

From the Corn and Bean Advisor

According to Brazil's consulting firm Trigo and Farinhas, Brazil could set a new record high for wheat production at 7.34 mmt vs. 6.31 mmt estimated by Conab.  The prior record was set in 1987 when Brazil produced 6.13 mmt. 

 

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