THE OPEN
November beans: 1/4 lower
December meal: .70 lower
December soyoil: 19 higher
December corn: 1 lower
September wheat: 3 1/2 higher
The markets opened as expected with a firmer note in wheat on reported sales to China. Traders were back to buying oilshare and buying beans/selling corn into the report. Rains which moved through part of Iowa, Wisconsin, and northern Illinois with slightly cooler temperatures created morning long liquidation in beans while spurring more selling interest for corn. Bearish ideas before the report surfaced in corn which led to bean/corn and wheat/corn spread trade.
The surprise of the report was mostly found in wheat, which was more bullish than traders expected. Post report wheat futures rallied further as shorts sought to exit the market, which triggered buy-stops. Early trends of firmer oilshare and buy wheat/sell corn trade continued after the numbers were released.
At 11:00 the July WASDE was as follows:
USDA Reports Flash 07/10 11:09
U.S. PRODUCTION (Million Bushels) 2020-21
Jul Avg High Low Jun 2019-20
Corn 15,000 15,060 15,296 14,994 15,995 13,617
Soybeans 4,135 4,167 4,382 4,133 4,125 3,552
U.S. AVERAGE YIELD (Bushels Per Acre) 2020-21 (WASDE)
Jul Avg High Low Jun 2019-20
Corn 178.5 178.9 181.0 178.0 178.5 167.4
Soybeans 49.8 50.1 52.8 49.8 49.8 47.4
U.S. ENDING STOCKS (Million Bushels) 2019-20
Jul Avg High Low Jun
Corn 2,248 2,286 2,403 2,200 2,103
Soybeans 620 589 635 535 585
Wheat 1,044 1,042 1,053 1,010 983
U.S. ENDING STOCKS (Million Bushels) 2020-21
Jul Average High Low Jun
Corn 2,648 2,782 3,010 2,525 3,323
Soybeans 425 443 572 355 395
Wheat 942 959 1,006 875 925
WORLD ENDING STOCKS (Million metric tons) 2019-20
Jul Avg High Low Jun
Corn 312.0 315.7 320.5 311.8 312.9
Soybeans 99.7 99.5 101.0 98.0 99.2
Wheat 297.1 297.1 298.0 296.0 295.8
WORLD ENDING STOCKS (million metric tons) 2020-21
Jul Avg. High Low Jun
Corn 315.0 325.6 340.0 310.0 337.9
Soybeans 95.1 97.7 107.6 94.7 96.3
Wheat 314.8 315.5 317.6 311.8 316.1
WORLD PRODUCTION (million metric tons) 2019-20
Jul Avg High Low Jun 2018-19
CORN
Argentina 50.0 49.9 50.0 49.0 50.0 51.0
Brazil 101.0 100.8 103.0 99.0 101.0 101.0
SOYBEANS
Argentina 50.0 50.0 51.0 49.0 50.0 55.3
Brazil 126.0 123.4 125.0 122.0 124.0 119.0
U.S. PRODUCTION (million bushels) 2020-21
Jul Avg. High Low Jun 2019-20
All Wheat 1,824 1,855 1,885 1,826 1,877 1,920
Winter 1,304 1,249 1,285 1,227 1,266 1,304
HRW 710 732 760 710 743 833
SRW 280 291 301 269 297 239
White 275 225 230 219 225 232
Other Spring 550 548 564 529 N/A 562
Durum 56 59 65 52 N/A 54
Corn: Neutral report with 19/20 production slightly below the average trade guess, and 20/21 close to the estimate. 19/20 corn to ethanol was lowered 50 mln bu to 4,850 mln bu.
Beans: Bearish with 19/20 carry-out much above expectations at 620 mln bu. USDA raised 19/20 crush by 15 mln bu, but lowered use from 3,891 to 3,857 mln bu.
Wheat: Neutral to friendly report, with EU production possibly the lowest since 2012/13. Russian estimates were lowered as well, with all wheat production lower than expected.
SOY
- The soy complex opened as called with prices trending lower for meal, mixed for beans, and firmer for soyoil at the start of the trading session. Sep. crush traded to 76.85c/bu while oilshare values traded to 32.42%.
- Meal was a mostly technical affair at the open with short-covering over in the first part of trade as charts built in some resistance.
- December soyoil prices popped over 29c again in retracement of a 2860c-2960c trading range.
- Spreads generally remained firm with August / Nov beans narrowing into 3 1/2c from 5 1/2c before the report. New selling was noted after the report as funds maintain a long position and profit-taking became the key feature of trade.
- Oilshare continued to strengthen as meal sold off post data to trade down towards recent lows. Towards the midday hour the soy complex took a defensive turn again as prices traded through recent lows for November at $8.95 which triggered sell-stops.
- Meal charts, which had been building resistance, took a turn lower as midday forecasts moderated and Trump was noted talking about a possible lack of follow-through on any trade deal for Phase two.
- December soyoil prices traded back to recent lows. Price action today now creates tops in beans and meal as prices attempt to define trading range lows.
GRAINS
- Despite a hefty sales announcement of corn this AM to China the path of least resistance after the open was lower as funds added back some of their short positions with Dec. back under $3.60. China continues to auction off its corn reserves on a weekly basis, with stocks dropping substantially leading to speculation that more business could surface down the road.
- In the big picture, however, South American and Black Sea prices are at a discount to US.
- The sales announcement for wheat to China perhaps surprised the market the most, which created more unwinding of recent buy corn/sell wheat spreads. Sep. wheat/corn traded from 174c to 1.85c before the report was released, rallying to 1.95c afterwards. Spreads remained firm before the report as well with Sep./Dec narrowing into 7 1/2c from 8 1/2c.
- After the report was released, wheat prices triggered buy-stops with September trading over key resistance of $5.35 into new highs for the move up. The break in corn was met by good scale down pricing orders from those who had missed out before the June 30 report. Lower support in Dec corn towards the $3.40 level held as some funds also took the break as an opportunity to cover a short.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
November beans: 10 lower 9.04 3/4 8.87 1/2
December meal: 4.50 lower 306.70 300.20
December soyoil: 8 lower 2916 2866
December corn: 10 lower 3.59 1/2 3.44 3/4
September wheat: 9 higher 5.39 5.20 1/2
November canola: .80 lower 483.30 479.60
OUTSIDE MARKETS
The stock market turned higher from lower with crude oil prices back over the $40/barrel level. The US dollar broke down to 96.43.
CLOSING COMMENTS
The numbers in the USDA report were digested, but it was quickly back to weather and politics. The report was more friendly than expected for wheat, and neutral to slightly bearish for beans. Corn numbers were neutral. Prices broke after the report as forecasts moderated a bit on the heat coming in. Politics again came into the picture with Trump stating that he no longer was thinking about negotiating a phase-two deal with China, saying the relationship between the two countries was damaged by the coronavirus.
The negative comments and forecasts created a sell-off that will determine overall trading ranges while the balance of July weather plays out. Trading ranges now appear as such:
November beans: $8.80-$9.15
December meal: $295.00-$308.00
December soyoil: 2850c-2960c
December corn: $3.40-$3.63
September wheat: $5.15 - 5.39 or higher
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America