THE OPEN
November beans: 18 higher
December meal: 4.50 higher
December soyoil: 67 higher
December corn: 13 1/4 higher
December wheat: 18 3/4 higher
The markets opened higher and continued to keep nightly gains into midday with corn prices extending towards gap-fill. Wheat seemed to struggle at new highs as prices probably need to back and fill and congest gains. Drier and warmer weather kept the upside of the market intact. End-users took advantage of macro weakness yesterday to get something on the books.
More trade guesses are coming in towards US yields for beans and corn. Cordonnier forecast beans unchanged at 50 bpa and corn at 175.5 bpa. Cordonnier forecast Brazil's total corn crop dropping to 88 mmt with a neutral to lower bias.
SOY
- The soy complex traded higher as prices continue to perform within recent ranges. August beans traded up to $14.52 3/4 while Sep. and Nov. were back over the $14.00 benchmark. Soyoil prices regain leadership over meal again, as Sep. oilshare trades to 47.51%. Soyoil prices gain on meal, which pushes Dec meal back below $370.00 with end-users still exercising patience. Bean spreads continue softer as most of the Chinese bean buying continues to come from South America.
- The August/Nov bean inverse leaks down to 44 1/4c from 56 1/4c, while Sep/Nov inverse falls to 7c from 11c. Sep/Dec meal spreads are wide as well moving out to a low of $5.00 from $3.80. Stories of continued concerns over the spread of ASF in China vs. good demand for soyoil provides a good back-drop for traders to buy soyoil/sell meal.
- Higher canola prices trade in lock-step with firmer soyoil, as warm and dry conditions in Canada continue. November canola prices hit a new ctr high last week at $949.00 before breaking back below $900.00 briefly. Canola price action still remains very well supported in congestive mode from $895.00 to $949.00, but the chart appears vulnerable to a further break if prices settle under $900.00. There are also reports that US crushers are slowing down due to the lack of bean supplies. At midday, meal prices trade lower pressuring beans to new lows for the day.
GRAINS
- Wheat and corn prices had a recovery trade though there was noted profit-taking in wheat as prices climbed to new highs. Minneapolis and KC wheat prices remained firm, with some buy KC/sell Chicago spread trade. Wheat trade remains extremely technical in nature, with more profit-taking as prices hit new trading range highs.
- Corn prices were lifted by the fact that ratings were left unchanged, with warm and dry forecasts this week suggestive that ratings could decline next week. Talk of record yields and early harvest in the Midwest counter what are likely huge losses in Minn and the west. South American corn values remain very firm with chatter that Brazilian exporters are cancelling corn export sales.
- December corn moves closer to gap-fill at $5.73 1/2, while Sep. corn prices remain further away with a high at $5.76 1/4, but gap-fill at $5.88. Dec/March corn trades into a 6 3/4c carry from 7 1/4c, while Sep/Dec trades back up to 6 1/2c inverse from 3 1/2c. Dec wheat/corn trades from 1.62 1/4c down to 1.46 1/4c. At midday, prices are losing the momentum rally turning back towards even.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
November beans: 4 higher 14.06 1/4 13.73 3/4
December meal: 1.30 lower 371.90 363.10
December soyoil: 90 pts higher 64.78 63.04
December corn: 8 higher 5.70 3/4 5.53 1/4
December wheat: 1 higher 7.26 3/4 7.06 3/4
November canola: 7.50 higher 917.00 895.60
OUTSIDE MARKETS
The stock market is bouncing back up 400 pts after yesterday's lower path. Crude oil trades up to $67.40/barrel, and the US dollar trades to 93.17.
CLOSING COMMENTS
The mission of the markets is to define value levels though hot and dry weather will keep price action well supported. Charts are featuring breaks that are higher than previous levels, providing the market with uptrends that are holding. End-users look to extend coverage on breaks with pricing below, producers looking for prices to stretch higher than current ranges. August will be the make or break month here for beans.
Fact of the matter is that good rallies are accompanied by good breaks, but weaker markets will not come back and rally at all. Prices are still in wide ranges with ADX trends that are weak, meaning trend followers will not hop on board unless prices can find upside follow-through.
Trading ranges now are as follows:
November beans: $13.50 - $14.30, prefer to scale into length on good breaks
December meal: $355.00 - $385.00, if needing to price remain patient, don't chase a rally
December soyoil: 58c to 66/67c, prefer to own good breaks here as the major trend remains higher
December corn: $5.30 - $5.80, chartists will continue to look at the open gap as bearish, be patient if needing to price
December wheat: $6.90 - $7.25/$7.30, look for good breaks to own
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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