THE OPEN

July beans:  10 lower

July meal:  1.10 lower

July soyoil:  230 pts lower 

Julu corn:  9 lower

July wheat:  7 1/2 lower

The markets opened lower and continued to sell-off on weaker technical considerations, more rains across northern portions of the country, and sharply lower palm oil prices that pressured soyoil futures.  Overnight rains across the Dakotas were actually better than expected with widespread coverage of 1/4 to 1" with some 2" rains thrown in.  Next week will turn hotter and drier, but wetter conditions combined with a disappointing bean WASDE and lower soyoil, was enough to find some bull traders evening up.  Bearish political headlines provided a negative side-show, and peripheral reasons to book a profit today.

SOY

• The soy complex opened lower with July contracts undergoing a heavy round of liquidation as technical traders watched broken lines of support lead to further new lows.  Beans were also pressured by sharply lower soyoil prices, which were responding to weaker canola, rapeseed, and palm oil prices.   
• July soyoil ended its session on key support, which is typically a sign that this level will be tested with trade underneath.   The market wasted little time as bulls saw the major trendline support in July soyoil breached at 68c, triggering sell-stops and a move to limit down trade.  Meal prices were the beneficiary of unwinding buy soyoil/sell meal trade, but eventually melted into new lows as well.  August oilshare falls to 45.96%, while crush trades down to 77c/bu.  The spreads were also lower with July/Nov trading down to 81 1/4c from its recovery high at 96c.  
• July/Dec meal spreads find support at a $12.20 carry, trading back into $10.50.  July beans quickly takes out good support at $15.25 which sends it directly to the 50-day moving average at $15.12, before trending closer to $15.00.  November bean prices also corrected lower now trading under its gap from this week at $14.38 towards the $14.00 level, ultimately holding up better under the pressure.  As soyoil locks limit and recover, it is interesting to watch beans trade, which seem to live and breathe in the direction of soyoil.

GRAINS

• Grains struggled today as corn prices could not take out contract highs on a friendly USDA report, or even come close to sticking the landing.  Funds are long an estimated 280K corn, and are now opting to lighten up and wait and see.  Spreads were also under pressure with July/Dec trading down to 77 3/4c from 88 1/2c, while Sep/Dec inverse is currently hanging on to recent support levels from 17 1/2c to 19c.  Dec wheat/corn trades from 82 1/2c to 90c.  
• July corn finds its way down to the key support level which is close to $6.66, while December corn prices remain over the small gap closure at $5.93 3/4 and over $6.00, perhaps an indication that this level is now a value one.   Though the break today in corn is first and foremost a weather and technical story, a few political news items are drawing attention.  The first is China's Ag Minister announcement that they are finding feed alternatives to corn, with higher wheat reserves, implying they may not need to import as much.   
• On the US political front, there are reports that the Biden administration could be listening to oil refiner pleas for relief on biofuel mandates.   Industry ethanol margins have struggled lately moving from a net profit to slightly above break-even.   Those peripheral bearish stories along with northern plains rains finds traders in a sell mode.    
• Minneapolis futures enter into double digit losses with the better rain forecast, which weighs on KC the most, but Chicago as well.  July Chicago wheat breaks to $6.69 1/2, new lows for the move down, but also finds short-covering and a pop to the plus side of even, indicating perhaps a "sold-out" situation.  Russia's Sovecon released another wheat estimate, raising it by 1.5 mmt to 82.4 mmt. 

AT MIDDAY THE MARKETS ARE AS FOLLOWS:

                                                                   hi                                       lo

July beans:  38 lower                            15.51 1/4                            15.04 3/4

July meal: 3.40 lower                             383.90                                377.60

July soyoil:  346 pts lower                     70.60                                  66.96

July corn:  14 lower                                7.03                                    6.73

July wheat: 1/4 lower                              6.88                                    6.69 1/2

Nov canola: 21.10 lower                         760.20                                732.50

OUTSIDE MARKETS

Stocks were higher overnight up 100 pts but have traded both sides at midday.  Crude oil continues to print new highs, now trading up to $71.19/barrel.  The US dollar finds a bid trading to 90.60.

CLOSING COMMENTS

The trading ranges are extending wide to either side, and this remains a technically weak day.  However, there is still a long way to go before the growing season ends, and solid breaks are still trading opportunities from the long side.  The COT is going to find that funds are long everything except wheat, and until they work out of these positions and go short with a fundamental shock, would continue to own breaks.  

The June 30 Acreage and stocks report could be the trend turner for the markets, depending on weather of course.  If a dry and hot pattern continues across the northern plains and the western Corn Belt after these weekend rains, would look to still see higher prices.  As to production guesses, IHS Market forecast its corn acreage number today at 96.5 mln acres, a number that is on the high side of current estimates, with beans at 89.065 mln acres.  Should these acres come to fruition with ideal weather, prices can go lower.   For now, if short would still think about covering something in on this break, as the market is just trading back and forth, and selling at trading range lows would not be ideal.   Firm cash overall, tight existing carry-out, the potential for a ridge to set up after this weekend, and declining Brazil corn estimates are friendly items.  

Crop ratings could add back some of what has been lost today, as advertised guesses call for declines of 3-5%.  Given these rains just transpired, market guesses are probably correct.  

Have a good weekend........

 

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