THE OPEN

July beans:  10 higher

July meal:   6.20 higher

July soyoil:  13 lower

Jul corn:  12 higher

July wheat:  10 higher

The markets opened as expected but buying came flooding back to the markets as funds appeared to buy back what they liquidated yesterday.  The sale of corn to China fueled the upside of the market, but beans led the way higher into the USDA report to be released tomorrow.  Meal traded to new highs, and a meal led rally is always supportive for beans.  Bull spreading was fashionable today bouncing back from the sell-off in prev. weeks. Oilshare continued to struggle with palm, crude, and canola prices lower.  Theme of the day is that of air in the markets as sellers step aside.  A weaker US dollar is net positive for Ag trade as well.

SOY

• The soy complex traded higher on the day with technicals pointing to higher trade which came to fruition out of the starting gate.  This was an extremely technical day of trade particularly after prices traded higher from lower in the PM session, closing at the upper end of the range which usually dictates upside follow-through.   July bean strength was noted as the pullback was shallow yesterday.  
• When markets do not break when all else is weak, that market is sending a signal of technical strength.  
• July beans traded through $16.00 at the open and quickly traded to further ctr highs closer to trendline resistance at $16.33.   November futures also rallied higher from trendline support at $14.00, with only half the gains of nearby contracts.   July meal prices ticked higher after trading over major trendline resistance to trade toward $455.00 to $458.00 key resistance.  
• July soyoil likewise follows the rest of the markets higher, jumping back over 65c, but as a follower.  Crush margins remain attractive at 85c/bu while oilshare trades to 41.86%.  Spreads firm with July/NOv at 1.89 3/34c inverse from 1.73 1/2c.  Meal spreads are higher with Jly/Dec trading to a new high inverse at $29.60 from $24.80.  At midday, prices still remain well supported which points the way to a solid close of gains.  

GRAINS

• Grains accelerated gains in the early moments of trade with corn spreads working higher. The sale of corn to China supported opening values, as did more consulting firms lowering the Safrinha output.  One consultant lowered Brazil total corn production by 3 mmt to 97 mmt, with a neutral to lower bias moving forward, and raised Brazil bean production slightly by 1 mmt to 134.0 mmt.  While USDA guesses for Safrinha corn are at 103.0 mmt, other private analysts out of Brazil cut down production even more, with some out yesterday around 93.5 mmt to 95 mmt.  
• July corn prices quickly tacked on gains recovering from a steep sell-off that more or less confirmed $7.00 as a major benchmark support level.  December corn also dittoed that trend with a test of major support at $6.00, also holding for a rally.  July/Dec corn bull spreads strengthen with the inverse trading up to 1.15c from 1.02 1/4c, and values that were under 90c last week on money flows into the new crop.  July wheat remains a follower but does finally target $7.50.  
• While some areas of HRW see rainfall, concerns still are noted for northern areas of the western Midwest into southern Canada.  The July wheat/corn spread trades from 10c from 23 1/2c.  
• At midday, July corn is posting an outside day of close, meaning a settlement towards the upper end of this range could lead to higher prices once again, while a mid-range close could suggest that a wide sideways pattern will develop. 

AT 12:00 THE MARKETS ARE AS FOLLOWS:  

                                                   HI                           LO

July beans:  33 higher            16.25 1/2                15.73 1/4  **new ctr high

July meal:  7.40 higher           452.20                    438.20

July soyoil: 112 pts higher       65.29                      63.11

July corn:  14 higher                7.32 1/2                  7.03 1/4

July wheat:  10 higher             7.49                         7.22 3/4

July canola:  25 lower              976.00                    931.00

OUTSIDE MARKETS

The Dow opened 300 pts lower but losses accelerated led by lower tech stocks and worries over inflation.   At midday, stocks are down over 600 pts while the US dollar weakens to 89.98.  Energies are higher at $65.33/barrel.  

CLOSING COMMENTS

The tenacity of this bull market showed itself again as buyers continue to be attracted to values on breaks of size.  The combination of strong cash, light hedge selling, tight spreads, firm demand, and inflation continues to set the tone.  Overbought extremes helped to fuel the break, but prices come bouncing right back which shows that a little demand is all that is needed to send prices upward.

Would opine that one should continue to own breaks, cover shorts, and find places to own for the long term.  The market was on a mission to find trading range lows, and that goal seemed to have been successfully executed given today's current strength.  

Trading range:

July beans:  $15.75 to possible highs of $16.50, would be careful as today's high was close to trendline resistance at $16.33

July meal:  $420.00 to $455.00, watch for resistance to hold at recent highs however

July soyoil:  63c to 66c, could resume a leadership role easily

July corn:  $7.00 - $7.35, could target $7.50 or move sideways into the report if a mid-range close develops

July wheat:  $7.20-$7.70, if wanting to be short something this would be market to do so

 

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