THE OPEN
November beans: 1 higher
December meal: .20 higher
December soyoil: 1 higher
December corn: 1/4 higher
September wheat: 3 lower
The markets opened with short-covering in corn and beans. Profit-taking in oilshare was noted with beans stabilizing on a series of business flashes this AM. Buy corn/sell wheat trade was also noted, along with buy meal/sell soyoil.
At 10:00 export inspections were as follows:
Beans: 635,656 mt vs. 557,607 mt week ago (and vs. an expected 535,000 mt)
Corn: 1,140,979 mt vs. 726,657 mt week ago (and vs. an expected 925,000 mt)
Wheat: 379,949 mt vs. 556,154 mt week ago (and vs. an expected 565,000 mt)
Inspections were low end for wheat, which led to more selling after the start of the trading session.
SOY
- The major feature of the day was short-covering in beans, following more business announcements and a technical sell-off that hit the lower end of recent trading ranges.
- November beans traded to a level that has held over the last few months before stabilizing, bouncing off $8.65 to trade back over the 100-day moving average of $8.68. China continues to be around the bean market despite negative rhetoric. Trade chatter has it that there should be strong Q4 exports to China as margins are favorable.
- December meal prices hit new contract lows this morning at $286.20 with reversal trade to the upside, presenting as an outside day of trade so far. A higher close, which would not be hard to do, would suggest a temporary low could be in place for the move down in meal.
- Profit-taking in oilshare was the major feature as December soyoil bounced back to 31c but found profit-taking as bulls remain long this market. Nearby bean spreads were a touch wider with Sep/Nov trading out to 3c from 1 3/4c. Sep/Dec meal trades from $4.00 to $5.00 carry.
GRAINS
- The major feature in grains was that of buy corn/sell wheat trade. Corn price action is becoming "stuck" at recent lows, as large yields and production numbers are now getting factored into the market.
- Rains will be hitting Iowa today, which will continue to reinforce ideas that big crops are coming. More rains will be needed throughout August to help Iowa crops still reach potential.
- Corn spreads are tightening up a bit, as Sep/Dec narrows into 11 1/2c from 13c, and Dec /Dec trades into 37 1/4c from 40c. Producers continue to wait for a better rally as harvest draws ever closer.
- Corn harvest should increase in the south with crops probably looking good based on the crop ratings.
- Wheat futures continued to trade on the defensive as more traders buy corn/sell wheat based on growing global production from Russia and Canada. Dec wheat/corn trades from 1.80 1/2c down to 1.76c.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
November beans: 7 higher 8.75 1/4 8.65 1/4
December meal: 4.00 higher 290.90 286.20 *new ctr lows
December soyoil: steady 3099 3052
December corn: 2 higher 3.23 3/4 3.20 1/2
September wheat: 5 lower 4.97 1/4 4.90
November canola: 1.00 lower 491.50 487.10
OUTSIDE MARKETS
The stock market kept rolling to the upside up 250 pts into the early morning hour, with crude oil back to $42.33/barrel. The US dollar is firmer trading to 93.69.
CLOSING COMMENTS
Look for more position-evening into the August 12 report.
November beans appear ready to head into its comfort level trade from $8.65 to $8.85, congesting perhaps around $8.75 into the report.
December corn prices hold on to $3.20, and corn can find its season lows sometimes before or shortly after the August report is released. Prices have factored in lots of bearish news, and the Sep. contract is close to the $3.00 benchmark.
Sep. wheat remains weak but could be oversold, so more dips could prove to find some short-covering interest.
Dec. soyoil tests key support at 3050c successfully so far, but any violation of this level now and its crossing lines of support underneath would suggest a larger sell-off in oil and oilshare is coming.
Dec meal could be in the process of posting a major reversal but would need a high end close to suggest it is on its way.
FYI DEPARTMENT
The weaker US dollar is creating more money flow into the commodities space. Rising gold futures and stabilizing crude oil are examples of this. Assets under management in commodity funds rose to $570 bln in July, according to estimates by Citigroup, up 13% from June and 27% higher than a year ago.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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