THE OPEN

July beans:  5 1/2 higher

July meal:  1.20 higher

July soyoil:  24 higher

July corn:  1 lower

July wheat:  4 higher

The markets opened as called with soyoil prices triggering buy-stops to trade to new highs for the move upward with some oilshare bulls locking in profits.  Bean prices traded to new highs against lower corn, while wheat gained on corn as well.  

SOY

• The soy complex opened strong but soyoil prices saw two-sided trade as bulls took profits on the soyoil run and oilshare.  July soyoil triggered buy-stops over prev. 2814c tops to trade to 2820c, but turned lower when crude oil prices dropped due to more bearish EIA stats.  
• The EIA crude oil report was bearish for energies, sending prices quickly into the red once released.   EIA reported that crude oil inventories added 2 mln, gasoline stocks were up 2.8 mln, and distillate stocks were up 9.9 mln.     
• Sep oilshare traded down to 32.75% as crush was steady at 86.31c/bu.  
• July meal prices firmed as charts signaled that some basing activity was going on for this market. Buyers/consumers should probably be taking advantage of meal weakness as prices remain fairly close to recent contract lows.    Meal spreads narrowed as well with July/Dec narrowing into $8.20 from $9.20.  July meal met key resistance at $286.50 only to back and fill with beans, while the true swing point would be trade over $288.00.   
• Beans were higher on both technical considerations as well as an uptick in demand.   The USDA announcement for 186,000 mt going to China was corrected for unknown, as lower US bean prices may not only attract China, but other origins as well.  This has been the case in the past when bean prices were globally competitive.  
• A firming Brazilian currency added support to a higher bean market, allowing for prices to maintain gains.  Technically, July beans have to take out key resistance at $8.62, while Nov beans took a bigger step upward by trading past recent highs of $8.65, triggering buy-stops and fueling a bit of fund buying.  
• Nearby bean spreads were firm with July/Nov trading into 8 3/4c from 11c.  

GRAINS

• Wheat prices rebounded today off the PM session lows, only to return to weakness in the last part of the trading session.   Daily stochastics in wheat are trying to head higher, but price action remains choppy.  
• July wheat futures rallied into key resistance at $5.15, but also found those willing to lock in a profit or try the short side given recent weakness.   
• Corn prices continued range-bound but was the sell leg of bean and wheat spread activity.  July corn prices sell-off to test key support at $3.20, and further sell-stops are probably located just under $3.18.   
• EIA report shows that ethanol production was up 5.5% to 765,000 bbl/day, which would utilize around 4.0 bln bu of corn.  Ethanol stocks declined more than expected by almost 3% to 944 mln glns.  
• Pressure was noted for corn for much of the day as weather remains hotter and drier, but the extent of this dryness is what will determine if shorts have to cover, adding upside to recent charts.  
• Spreads were weaker with July/Dec corn trading out to 14 3/4c while July/Sep traded out to 4 3/4c from 4 1/4c.  July wheat/corn traded down to 1.86c from 1.91 1/4c.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                      HI                                LO

July beans:  5 higher                                   8.58                            8.51 1/4

July meal:  1.50 higher                                 285.40                         283.80

July soyoil: 10 lower                                     2820                            2778

July corn:  1 lower                                      3.24 1/2                      3.21 1/4

July wheat: 2 higher                                   5.15 1/2                      5.06 1/2

July canola: 2.30 higher                             464.70                        460.30

OUTSIDE MARKETS

Stocks were strong in the early session up 266 pts. but picked up steam, trading over 400 pts higher, and back over the 26,000 level.  Crude oil falls to $35.88/barrel.  Services PMI reading came in better than expected, leaping over expectations.  Factory order readings were not as bad as expected, with traders viewing economies as coming back.  Bargain hunters were out in full force.  The dollar index traded to the lowest level since March 12.  

CLOSING COMMENTS

The key to a higher corn trade will have to come from fund short-covering.   Charts continue to consolidate, though price action leans lower today.  A high side target for July is $3.40, which will come courtesy of panic buying.  Even if charts continue to tread water at current lows, continuous trade over key support in July from $3.18 - $3.20 is price friendly.  Traders still view corn as fundamentally bearish if weather maintains the status quo.  July/Dec corn has traded as narrow as 12c, but if the growing season remains solid the spread could widen back out towards recent lows at 19c.  

Beans remain upwardly slanted, though buyers clearly do not want to chase them at new highs.  More business will help beans to strengthen further, and confirmation of new business will bring added value to a bean break.  Next time bean prices break, buyers will probably be there to shop.  After all, it seems that more origins already are, given the business announcement switch.  

Next in line for a good buy is soyoil, where building demand for palm could spill over into this market as well.  Given the spurt to new highs in July at 2820c, would look for pullbacks to find fund buying interest, and perhaps eventual gap closer from 2850c/2890c.  Would look at a pullback to 2720c-2750c to be a buying opportunity in a market that probably works higher.

July wheat prices remain well bid, and the $5.00 level has been value in Chicago for a while.  If short, think that today's drop to $5.06 could be a good short-covering opportunity.

In other words, long run potential is lower, but may have to wait for at least one or two weather scares before that.  If short, would think about covering something in.  

Have a good evening.........

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