THE OPEN

July beans:  7 higher

July meal: .70 higher

July soyoil;  37 higher

July corm:   6 higher

July wheat:  7 lower

The markets opened as called with July corn once again in the lead to the upside with the nearby spread strengthening.  As the report time approached volumes dipped with some profit-taking, particularly in oilshare as soyoil prices traded both sides of unchanged. 

At 11:00 central time, here is what the June WASDE had to say:

U.S. 2021 Corn, Soybean Production, Yield (million bushels, bushels per acre)

                                     Thursday's

                                     Estimate       Average            Range                   USDA May

Corn Production         14,990          15,018            14,990-15,218        14,990

Soybean Production   4,405              4,414            4,405-4,498            4,405

                                   Thursday's

                                   Estimate        Average             Range                  USDA May

Corn Yield                179.5 *               179.5                177.0-182.0       179.5

Soybean Yield           50.8 *                50.8                 50.5-51.0             50.8

U.S. Stockpiles (million bushels)

2020-21

                              Thursday's

                               Estimate        Average                   Range           USDA May

Corn                      1,107               1,205                     1,132-1,301         1,257

Soybeans                135                122                         105-144                120

Wheat                      852                868                       847-902                 872

2021-22

                            Thursday's

                            Estimate      Average                   Range               USDA May

Corn                       1,357        1,414                      1,282-1,516      1,507

Soybeans                155          139                          117-170             140

Wheat                      770          777                          661-840            774

World Stockpiles (million metric tons)

2020-21

                         Thursday's

                          Estimate     Average       Range                 USDA May

Corn                    280.6         280.1       276.0-283.0            283.5

Soybeans              88.0         86.7         85.8-87.6                  86.6

Wheat                  293.5         294.6       293.3-296.0            294.7

2021-22

                     Thursday's

                      Estimate     Average       Range       USDA May

Corn                 289.4      288.9       280.9-293.8    292.3

Soybeans              92.6       91.6        90.0-94.1      91.1

Wheat                296.8      295.2       288.1-300.0    295.0

2021-22 Wheat Production (million bushels)

                             Thursday's

                              Estimate     Average      Range      USDA May

All Wheat             1,898        1,890     1,850-1,919   1,872

Winter Wheat      1,309        1,306     1,278-1,333   1,283

Hard Red Winter    772          757       731-786       731

Soft Red Winter     336          336       316-350       332

White Winter        202          213       195-246       220

2020-2021

Brazil Production (million metric tons)

                    Thursday's

                     Estimate     Average      Range      USDA May

Corn                  98.5       97.0     89.7-103.0    102.0

Soybeans          137.0      136.2    135.7-137.0    136.0

Argentina Production (million metric tons)

                Thursday's

                 Estimate     Average      Range      USDA May

Corn               47.0      47.1      46.0-48.0      47.0

Soybeans           47.0      46.5      45.0-47.5      47.0

Reaction to the report resulted in higher corn prices, while the soy complex seemed to take a moment or two to digest the numbers.  Beans, meal, and soyoil fell sharply minutes after the report.  

Beans:  20/21 crush was revised from 2,190 mln bu to 2,175 mln bu, while exports remain unchanged.  20/21 total use was forecast at 4,575 mln bu to 4,560 mln bu in June.  21/22 ending stocks were adjusted higher by 15 mln bu to 155 mln bu, still hitting that tight market as anything under 200 mln bu reflects tight supply.  

Corn: USDA reports higher usage of corn amidst higher consumption by the world export market and rising ethanol demand.  Corn for ethanol was higher by 75 mln for 20/21 from 4,975 mln bu to 5,050 mln bu, based on the most recent data from the Grain crushings and Co-Products Production report, and weekly ethanol production and refiner and blender input data from May.  Exports for 20/21 were raised from 2,775 mln bu to 2,850 mln bu.  Total use for corn for 20/21 was raised from 14,870 to 15.020 mln bu.  

Wheat:  Report was neutral to bearish with most numbers rising.  20/21 exports were raised from 965 to 985 mln bu, with overall production increasing from 1,872 to 1,898 mln bu. No other major changes were noted, except for rising global production on good prospects from the EU and Black Sea.  The higher HRW number was largely expected.  Feed increased by 10 mln bu.  

SOY

• The soy complex traded higher today before the report but into the numbers traders started to book profits on soyoil futures.   Meal prices were firm but again is a follower of stronger neighboring markets.  July/Dec meal widens out to new lows at $8.50 carry from $7.10 before the report, but post report trades to $11.50 carry.  July open interest continues to be rolled forward with July/Nov beans trading down to 1.06 1/4c inverse from 1.15 1/4c before the report, but after the numbers seeing liquidation which sends the inverse down to 91 1/4c.  
• Post report also found profit-taking in oilshare.  On the bear side of the ledger is a weaker domestic bean basis, and very quiet export activity.  November bean prices traded back towards recent ctr highs at $14.80 placed recently before USDA numbers were released.  Old crop bean sales stand at 3.808 mmt with China taking 692 tmt and unknown for 1.2 mmt.  Combined sales plus shipment total 2.261 bln bu or 99% of the USDA's projected 2.280 bln bu program, with 12 weeks remaining in the marketing year.   Post report showed the keen disappointment with the numbers as longs decided to book more profits in beans, sending meal prices back to the recent lowest end of ranges.  
• Soyoil futures broke hard as well, testing recent lows from 70c to 71c, which ultimately revealed its trading range.    All in all not a great reaction, but the price action could have showed us our consolidation ranges into month's end.  Nov beans confirm that recent lows of $14.35 - $14.38 could be value, while July beans breaks to $15.37 but bounces back at midday.  Sharply lower soyoil prices weighs on beans, as it appears prices may close in the red.

GRAINS 

• Grains opened lower for wheat and higher for corn.  The feature of the morning continued to be that of higher nearby corn, with July quickly trading beyond trendline resistance on the chart at $7.03 which triggered more fund buying into the report and a trade post report into the next key resistance level from $7.15 to $7.20.  Would note that $7.14 was a peak high before the rally.  
• July/Dec corn inverse rallied to 93c before the USDA report from lows of 81c, while Sep/Dec consolidated from 24c down to 18c into the numbers.  July wheat prices traded both sides of unchanged after a weaker start with Minneapolis futures turning higher after being sharply lower on the back of better rainfall amounts.  KC wheat firms against Chicago, as the report was expected to offer up a more neutral stance for the wheat market.  
• After the release of the report corn prices extended gains, though prices did not quite test new ctr highs.  This will be a sticking point for the market should we lose the gains from today, though in the big picture pullbacks should be owned.  At midday prices in wheat are nearly steady, indicating that a trading range is likely to now set up which could be straddled or strangled.  On a weaker day, however, wheat still loses to corn.  At midday, corn continues to hold its gains, while wheat prices are mixed to lower.

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                                   HI                           LO

July beans: 13 lower                                               15.76 1/2                15.37 1/4

July meal: 3.30 lower                                               388.90                    380.90

July soyoil:  69 lower                                                72.74                      70.16

July corn: 14 higher                                                  7.17 1/2                  6.87 3/4

July wheat: steady                                                   6.89 1/4                 6.72 3/4

Nov canola: 4.00 lower                                            762.60                   748.00

OUTSIDE MARKETS

Stocks were trading higher up 60 pts with crude oil still in the green at $70.65/barrel with the US dollar at 90.31.  

CLOSING COMMENTS

The report verified what traders were expecting, that is to say a more friendly report for corn vs. neutral data for beans and wheat.  Good bean supplies from South America and lower crush help to cushion a tight supply situation, while the losses of corn in Brazil this fall makes the US more competitive and the place to come for export.  Having said that, we still need ideal weather in the US.  So far, the eastern Corn Belt is living up to its standard, while the western Corn Belt and northern plains have its problems.  

June is typically a month when escalating prices can reach their overall highs, and we are certainly going to see if the numbers live up to that seasonal.   The trend turner could ultimately come from a mix of better weather and a bearish acreage report on June 30.  Until then, would expect pullbacks in corn to see support, and since August is the make or break time for beans hard breaks should be purchased as well.  

As to the charts, best follow-through to the upside is awarded to July and December corn, as interim resistance at $7.05 and $6.18, respectively, was exceeded.  That turns the chart direction higher for both, and pullbacks should be purchased.   Would also look at the gap-fill Nov bean price at $14.38 to remain as a source of support, as there is still plenty of season ahead of us.  If short, would think about covering something at $14.38, as it appears others had the same idea.

July meal simply remains the bear market ideal, and if needing to price can be patient.  The path of least resistance is lower, and prices now appear ready to test $378.30 again.  As to soyoil, while prices have fallen back towards key support at 70c, this could also be the bottom of a trading range that could work higher still.  The chart outlook has not changed, though we are currently posting an outside day for soyoil.  A lower close would find prices possibly working lower, but it remains a buying opportunity as well.

Bottom line:  The report may have disappointed the bean bull, but in the big picture any carry-out in beans under 200 mln bu and under 1.5 bln bu for corn represents tight supply.  As such, the US cannot afford to lose production due to adverse weather problems.  Would continue to still be heads- up to quickly cover shorts and price or own good breaks.  The charts are not bearish.  

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

 

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