THE OPEN

July beans:  19 higher

July meal:  1.40 higher

July soyoil:  99 higher

July corn:  1 higher

July wheat:  5 lower

The markets opened as called but bean prices traded sharply higher and into new contract highs into the morning trade along with soyoil.  Grains labored with weaker wheat prices, while oilshare traded higher.  The sharp rally in the bean complex before the release of the numbers had some perplexed, given that nothing much had changed from yesterday to today, except the technical trade which offered up a decisive break-out on the upside.  End-user panic buying seemed to be part of the scenario in beans as values continued to rally. 

At 11:00, here is what the USDA had to say:

U.S. Corn, Soybean Production (million bushels)

               Wednesday's

                Estimate      Average       Range

Corn         14,990       15,071    14,809-15,218

Soybean   4,405        4,441     4,398-4,663

U.S. Stockpiles (million bushels)

2020-21   Wednesday's

                 Estimate    Average       Range             USDA April

Corn          1,257        1,260           1,135-1,361      1,352

Soybeans   120          118              105-130             120

Wheat         872          849              821-877              852

2021-22   Wednesday's

                 Estimate    Average       Range        USDA April

Corn           1,507      1,354          1,100-1,622         na

Soybeans   140         132             110-200           na

Wheat         774         762             644-941           na

World Stockpiles (million metric tons)

2020-21   Wednesday's

            Estimate    Average       Range      USDA April

Corn          283.5      279.4     275.0-285.3     283.9

Soybeans       86.6       86.9      84.6-90.1       86.9

Wheat         294.7     295.1     292.0-302.0     295.5

2021-22   Wednesday's

            Estimate    Average       Range       USDA April

Corn          292.3     284.1     269.3-295.1        na

Soybeans       91.1      88.8      78.7-94.0         na

Wheat         295.0     299.4     283.7-320.0        na

2021-22 Wheat Production (million bushels)

                        Wednesday's     Average      Range

                        Estimate

All Wheat            1,872               1,877           1,769-1,976

Winter Wheat      1,283              1,259           1,100-1,396

Hard Red Winter   731                716              640-806

Soft Red Winter     332                308             270-354

White Winter          221                231           185-265

2020-21 Brazil Production (million metric tons)

                    Wednesday's

                    Estimate     Average      Range          USDA April

Corn               102.0      103.4         100.3-106.0   109.0

Soybeans       136.0      136.1         134.5-138.0   136.0

2020-21 Argentina Production (million metric tons)

                      Wednesday's

                      Estimate     Average    Range    USDA April

Corn                47.0          47.4      46.0-50.0     47.0

Soybeans        47.0          46.7      44.5-48.0     47.5

Overall tone of the report was neutral to bearish for corn, bullish for beans, and mixed for wheat.  Traders probably remain bullish looking at remaining tight supply. 

Beans: USDA 21/22 sees lower supply, lower exports and higher crush.   20/21 ending stocks were unchanged at 120 mln bu, while 21/22 was still a tight 140 mln bu.  20/21 exports, crush, and seed were left unchanged.  21/22 USDA sees lower beginning stocks, lower exports, and higher crush.  21/22 crush was forecast at 2,225 mln bu vs. 2,190 mln bu in 20/21.   Exports in 21/22 were lower at 2,074 from 2,280 mln bu in 20/21.  

Corn:  20/21 USDA raised exports 100 mln bu to 2.775 bln bu, leaving ethanol unchanged at 4.975 bln bu.  USDA lowered FSI use by 5 mln bu to 6.395 bln bu.  20/21 stocks-to-use ratio was 8.4%, down from 9.1% in April.   21/22 total production at 14.99 bln bu forecasting total use at 14.765 bln bu.  For demand, USDA pegged FSI for new crop at 6.615 bln bu and ethanol use at 5.2 bln bu.  Exports for 21/22 are forecast at 2.45 bln bu.  

Wheat:  21/22 sees smaller supplies, higher domestic use, lower exports, and reduced stocks.  Exports are down 65 mln bu to 900 mln bu.  A reduced wheat-corn price spread is expected to raise wheat feedings in the June-August quarter, with annual feed and residual use projected at 170 mln bu, the highest since 2013/14.  21/22 sees larger supply, higher consumption, and increased trade.  New wheat production at 788.98 would be a new record, with higher production forecast in Argentina, the EU, Ukraine, and Morocco, and the US offsetting reductions in Canada and Australia.  

SOY

• The soy complex traded sharply higher as bullish technical signals for July beans dominated trade.  July beans rally 45c into the report, with November up 18c.    Following in line was July soyoil, which also set a new contract high into the report at 6744c.  
• Canola futures were slightly lower into the report, but the chart also remains bullish.  Strong cash and tight vegoil supply kept these markets afloat. Higher oilshare values were noted as traders applied more buy soyoil/sell meal trade, pushing July to 42.59%, while crush was slightly lower at 76c/bu.  July soyoil trades above double highs at 6628c double highs to achieve its morning primary resistance close to 6750c, all before the report was even released.  
• July meal continued to find more end-users moving up pricing ideas pushing prices into key resistance from $455.00 to $458.00 before 11:00.    Bull-spreading activity was dominant as July/Nov bean inverse traded to new highs at 2.11 1/4c before 11:00, and July/Dec meal inverse remained well bid at $30.30.  
• Post report lower grains pulled the soy complex off its contract highs, with the Nov/July inverse also trading down to 2.00c from its highs of 2.13 1/4c.  Meal gave up more of its gains than soyoil, with what could appear to now be a temporary high for this market.  At midday, the values are off the overall highs, but the market remains well bid. 

GRAINS

• Grains were mixed today as wheat seemed to become the sell leg of spread action.  Light selling and some hedging was noted in corn before the report was released, as July corn seemed to form lines of resistance at $7.30 to $7.33 which presented some technical caution into the numbers.  Beans continued to gain on corn throughout the day, while wheat continued to see technical selling activity.  Bull-spreading remained on the buy side for corn spreads, as the July/Dec inverse traveled to new highs for the move up at 1.19 3/4c into the numbers.  
• December corn prices traded back towards $6.00 as July corn prices spent most of the session before the report above $7.20, key support.  EIA released its ethanol numbers which showed production up 3% WOW to the highest levels of the year, at 979,000 bbl/day, which would utilize 5.2 bln bu of corn.  Ethanol stocks declined 5.1% to 814 mln glns, a low which matches 2016.   
• Wheat prices moved on the defensive for most of the morning against corn and beans.  The report broke the market further when released but corn found good commercial pricing activity as end - users took advantage of the technical weakness.  
• December corn prices break the most triggering sell-stops under $6.00 that take prices as low as $5.86 before finding support and a bounce back towards $6.00 again.  July corn sets a technical double low at $7.03, and the report today may have shown us our trading range heading into summer.  July wheat prices back down to the lower end of recent price action, but also finds pricing, short-covering, and perhaps new ownership. 

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                   HI                              LO

July beans: 28 higher                             16.67 1/2                   16.15 1/4  **new contract high

July meal: 2.20 higher                             457.20                       445.40

July soyoil: 149 pts higher                       67.44                         64.58       **new contract high

July corn:  5 lower                                   7.31 1/4                     7.03 1/2 

July wheat:  9 lower                               7.51 1/2                     7.25 3/4

July canola: 29.90 lower                        943.60                       902.30

OUTSIDE MARKETS

Stocks opened 100 pts lower but at midday are down 404 pts. at midday.  The US dollar trades up to 90.16 while crude firms to $66.32.

CLOSING COMMENTS

Technically, this was not a good day for corn charts, where multiple tops were placed in July, and December descended towards its lower level of support which could be in the vicinity of $5.80.  The lower Brazilian crop seems to be factored in for now with today's market reaction, and with a planting pace more or less on time and rains sporadic, more bulls could be satisfied with where we are at.  Tight supplies still dictate that buyers will be there to look at owning this market and think world buyers will be there to react quickly to market weakness.  We still need an ideal growing season here in the US, and therefore look for trading ranges to begin to develop.  Pullbacks will still be a good buying opportunity heading into the summer.  

Bean and soyoil prices jumped to new contract highs, pushing trading ranges higher.  A mid-range settlement may seal the deal for this market as well, but the rally today pushed the trading ranges up a bit to accommodate supplies.   If long, may want to think about booking a profit in this market as well, and keep the rest.  A larger pullback will also be a good buying opportunity into the summer, but those levels have been pushed higher.

Here are the ranges as they appear now post report:

July corn:  double lows at $7.03 and multiple highs at $7.35 suggest we could be about to move into wide trading ranges, still can trade higher if weather is adverse - target $7.50.

Dec. corn:  resistance is building and would look for the possibility of trading back to $5.75/$5.80 on a close under $5.95.  Excellent support is at this level, while overhead resistance moves down $6.18/$6.20 for a possible $5.80-$6.20 trading range.

July beans:   contract high is $16.67 1/2 but seems to be overdone.  Lowest end of the trading range is now at multiple lows of $15.75, but think we probably have trouble getting there.  Would look for $16.20 for support and take advantage of dips.

November beans:  contract high is $14.61 and nearly touches top trendline resistance.  Higher price action today finds the market adjusting to a $14.00 - $14.60 trading range, target high is still $14.75.

July wheat:  Straddle/strangle $7.20 -$7.70 and would not be a seller at the bottom as prices are locked and loaded in this pattern. 

 

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