THE OPEN

November beans:  2 1/2 lower

December meal:  steady

December soyoil:  33 lower

December corn: 4 lower

December wheat:   3/4 lower

The markets owned as called with prices turned mixed after the open as recent shorts covered beans and new buyers were attempting to find places to enter.  Products were firm as soyoil futures traded higher from lower.  Wheat prices rallied on short-covering.  Traders were booking profits on recent buy corn/sell wheat spread trade.  

In a separate story, Brazil's President Bolsonaro tested positive for Covid-19.  

SOY

• The soy complex opened on a steady note with soyoil prices gaining on meal.  December soyoil charts were constructive with prices holding 20-, 50-, and 100-day moving average lines to trend towards the recent highs of 2950c.  Higher palm, canola, and crude created further short-covering and new buying for soyoil, where prices are appearing ready to break-out to the upside and into new trading range highs if the gap can be closed at 2964c with trade above it.   
• Meal back and fill in congestive trade after moving to monthly highs as well with slight repositioning against soyoil.  Sep. crush trades higher to 79c/bu while oilshare strengthens to 32.40%.   
• November beans traded higher on the day but also was defensive with fund positions longer than expected, and a few locking in profits over the $9.00 level.  
• Spreads were slightly wider with August / Nov. trading from 6 1/4c out to 8c carry.  Sep/Dec meal trades from $5.30 out to $6.10.   
• The lack of AM sales for beans and steady ratings were negative, but all eyes were on the charts as prices bent in early trade but did not give back much.   

GRAINS

• Corn prices remained on the defensive for much of the day, but all in all the technical action did not deter a corn bull.  December corn walked back to test the $3.50 level, much as Nov. beans walked back to test $9.00.  Depending on the weather, if both benchmark's hold by end of day would give more ammo to the bull.  
• December wheat prices gave more validity to holding the $5.00 benchmark with a solid short in tow and some opting to get out.  Chicago wheat outperformed KC, as both charts attempt to stabilize at current lows.  
• Spreads were slightly wider in corn with Sep/Dec. trading out to 9 3/4c from 8 3/4c.  
• Export competition for corn remains fierce, but ideas that China may need to buy US origin to fulfill their Phase One deal remains a bright spot for the market. The wheat market, which had been higher, turned lower after it was released that Egypt purchased all Russian origin.  

AT 12:00 THE MARKETS ARE AS FOLLOWS:

                                                                 HI                              LO

Nov beans:  5 lower                               9.09 1/4                     9.00 1/4

Dec meal:  2.20 lower                            307.70                        304.30

Dec soyoil:  11 higher                            2946                           2883

Dec. corn:  5 lower                                 3.57 1/2                      3.49 1/4

Dec. wheat:  1 higher                            5.06 3/4                      4.97 1/4

Nov. canola:  1.40 higher                      480.80                         476.60

OUTSIDE MARKETS  

The stock market opened 200 pts lower and continues to tread water at lower levels.  Gold prices are above the $1800/oz level as the US dollar trades to 97.15.  Crude oil is net supportive for soyoil futures as prices now trade once again over the $40/barrel benchmark.

CLOSING COMMENTS

The July 10 USDA report is around the corner.  In front of that report funds are taking a more balanced approach by buying beans against a corn short.  That corn short has been pared back by about a third with bean length extended.   Funds are now really in a more balanced position heading into the July 10 numbers.

In the big picture, the report may once again remind traders that production is ample for now, and neutral weather could bring lower prices.  But the bullish June report also gave the market no choice but to make room for a higher level from which to fall once crops are made and harvest begins.  In the meantime, prices have ratcheted higher adding in some weather premium and lower acreage.  

In the world of supply, anything over 1.5 - 1.8 bln in corn is generally considered a comfortable supply number, and anything over 200 -250 mln bu of beans is the same.  On July 10, corn may be over 2.0 bln bu and beans closer to 380/400 mln bu, meaning a more neutral weather picture will point to lower prices ahead.  For now, the landscape has changed technically, and as pointed out lower acreage and a bit of warm and dry weather could still take away from production, which is why prices are probably going to tread water at higher levels for now.  

 

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