THE OPEN

Nov beans:  2 1/2 higher

Dec meal:  .40 lower

Dec soyoil:  41 higher

Dec corn:  1/4 higher

Sep wheat:  3 1/2 higher

The markets opened as called with prices trading mixed.  Grains turned lower after the start of the trading session, but short-covering was noted in corn.  There was noted unwinding of recent buy bean/sell corn trade.  Wheat futures, which had stabilized into the morning session, took a turn for lower prices.  Good export sales in beans gave prices a momentary lift, but bulls took that strength as an opportunity to sell something.  Beans seem to find resistance as we draw closer to high level talks scheduled between China/US for August 15.  Buy corn/sell wheat was a fan favorite trade.  

SOY

• The soy complex opened as expected with soyoil futures once again holding up the bean market.  
• December soyoil closed into strength and followed-through with fund buying activity as prices attempted to trade towards recent highs.  
• December meal dropped back to test contract lows at $287.50 as traders continue to buy oilshare.   
• Sep. Crush trades to 92.28c/bu, while oilshare sits at a strong 35.42%.  
• Weekly sales for beans came in at the top end of expectations with old crop sales up 72% from week ago, but down 22% from the prior 4-wk average.  November beans remain well supported by a new trendline that formed at the lows of $8.75, so pushing through the bottom will look extremely negative.  
• More yield expectations are rolling in for November beans that are over 51.0 bpa, which caps rallies. 
• Spreads are slightly weaker with Sep/Nov moving out to a 3 3/4c carry from 2 1/4c.   
• December meal prices traded into ctr lows at $287.50, but the charts now look as though there could be a further break down towards $285.00 first, with major support located at $282.50 should we go there.   

GRAINS

• Short-covering was noted for corn today, along with some pricing activity and bargain hunting as the $3.20 target level was met but not breached.  
• Corn basis remains firm as farmers are not engaged with today's prices.   
• Ethanol margins are steady for now as crude oil trends higher, adding more of a catalyst to cover a partial short at these lows.  
• Sep/Dec corn remains at recent lows of 12 1/4c but could continue to widen given excellent production potential.  Dec/Dec narrowed into 37 1/2c from 40 1/2c.   
• Wheat prices started strong but then broke through lows of $5.05, which triggered sell-stops and reversed price action from the night session.  US export sales were solid, but Russia and Ukraine origin remain the cheapest, thus sending futures down to a level that can spark further demand.   
• Production is rising globally with Ukraine grains to a record high, with wheat at 26.59 mmt and corn at 38.86 mmt, which are both slightly higher estimates than prev.  Canada is also on pace to achieve record wheat production.  
• Wheat lost to corn, with the Sep. spread trading from 1.96 1/4 down to 1.86 1/4c.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                         HI                         LO

Nov beans:  1/2 higher                 8.84                      8.75 1/4

Dec meal:  1.20 lower                   290.80                  287.70

Dec soyoil:  17 higher                  3163                     3097

Dec corn: 1/4 higher                    3.24 3/4                3.21 1/4

Sep wheat:  6 lower                     5.15                       5.02

Nov canola:  1.10 higher             491.40                   486.90

OUTSIDE MARKETS

The stock market turned higher from lower, trading up 39 pts.  Gold prices remain bullish with new highs at $2063/oz.  Filings for jobless benefits fell last week to their lowest level since the virus hit the US in March.  Initial unemployment claims fell by a seasonally adjusted 249,000 to 1.2 mln for the wk ending Aug 1.         

CLOSING COMMENTS

The market is trying to pencil in the myriad number of crop yield and production estimates for corn and beans, which are mainly bearish inputs for now.  July temperatures were hotter than normal, but August weather is offering the opposite.  Except for Iowa, the dryness concerns around the Midwest are less than 15%.  As of this moment, scattered rains are falling in those areas as well.  Normally bean and corn ratings tend to decline for this point in the year, but they are improving enough to compare them with very good production years such as 2014 and 2016.    

Technically speaking Dec corn stochastics are on the verge of turning higher implying that there could be a potential for corn to try to make a bottom, but prices have to settle over $3.30 to confirm.  Lower target price action still includes a look at $3.15/$3.17.  Look for continued resistance to hold on a bump to $3.25/$3.28.  Corn has not put in a technical reversal off its lows.   

November beans remain sideways but closing under $8.80 on a continued basis will weaken price action and turn prices back towards $8.70.  December soyoil sits at trading range highs, but the price action is solid.  Can continue to buy good breaks in soyoil until the chart puts in a good reversal.  So far, so good for the soyoil bull.  

Wheat prices hit trades towards the $5.00 level again, which suggests that $4.95 is a target potential.  

All in all, traders attitudes remain bearish given current weather.  If wanting to own something on the board, soyoil remains the place to be.  

Have a good evening.......

 

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