THE OPEN:
- November beans: 6 1/4 higher
- December meal: 4.20 higher
- December soyoil: 3 lower
- December corn: 7 higher
- September wheat: 3 1/4 higher
The markets opened as called with further short-covering activity. Technically, the markets continued to trend upward into new trading range highs. Oilshare values were weaker as meal gained on soyoil and corn gained on wheat. Beans were supported the most as funds are long and continue to build a long position against a large fund corn short. Wheat bears did not look threatened.
SOY
The soy complex opened as called with more outright buying in beans based on technical price action, which was friendly, and more short-covering in soymeal. Buy-stops were triggered over the key resistance level for December soymeal at $301.50, leading to expanded upside trade. December soyoil was the laggard today though prices did eventually move back over the 29.00 benchmark. September oilshare worked down to 32.40% as crush values improved slightly to 78 cents/bu. The July/Nov inverse collapsed and then traded out to a 4 ½ carry, while July/August lost its 7-cent inverse to trade to a 1 ½-cent carry.
As prices moved through the session, values continued to strengthen as more buy-stops were triggered, leading to higher technical trade. November beans have a gap open at $9.03, which now will serve as new and higher resistance, while December soymeal heads towards its 200-day moving average at $308.00, which could be its next big higher target. If long, these are both good levels to liquidate a partial position. December soyoil may have trouble staying over 29.00 for the day as traders unwind buy soyoil/sell meal spread trade.
GRAINS
Grains worked higher today with corn leading the upward charge, where more shorts are electing to opt out on the fundamental shock delivered yesterday which took prices technically higher. Pullbacks will now be viewed as opportunities to get out of the market. Volumes increased dramatically as corn prices rose, as funds buy into commercial pricing activity in an exchange of ownership.
Wheat prices seemed to struggle for much of the day as the report was generally not bullish for this market, and higher prices will make for a more uncompetitive world trade. September wheat/corn traded from 1.52 ½ to 1.40. Sep/Dec corn narrowed to 8 cents from 10 cents, while Sep/Dec wheat traded from 6 ¼ out to 7 ½.
The weekly EIA report came in on the constructive side with production nearly 1 percent higher on the week to 900K bbl/day, which would utilize around 4.8 bbu of corn. Ethanol inventories fell more than anticipated down 4.1 percebt to 847 million gallons. In terms of technical trade, September corn traded close to a target high of $3.55 by midday, with pullbacks during the session continuing to see support. December corn traded over key resistance at $3.60 to $3.63, which could allow for prices to expand again towards $3.70.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
November beans: 17 higher 9.01 1/4 8.81
December meal: 9.60 higher 306.40 296.40
December soyoil: 16 higher 2906 2867
December corn: 8 higher 3.63 3.49 1/2
September wheat: 3 higher 4.99 1/4 4.89
OUTSIDE MARKETS
The stock market opened 38 pts higher and has been mostly steady all day. Crude oil trades back over the $40/barrel mark, with the U.S. dollar falling to 97.02.
CLOSING COMMENTS
The theme of the day will probably continue into the close as many traders in corn cut back on their overall positions heading into a long weekend. Future weather maps feature a dry and hotter spell, which will impact areas that did not see recent rainfall activity. Wheat continues to struggle to maintain higher trade and would have to wonder if not for stronger corn and beans where that market would actually be trading. Harvest continues to progress nicely, and competition remains strong from the Black Sea.
Some good technical highs were achieved today, which warrants caution if long. However, at this point pullbacks are probably going to hold together well. Funds are still sitting on big shorts in corn and could elect to get out if weather turns hotter and drier, and the next set of condition ratings are lower. It appears funds are buying more beans today against that large corn short, hoping perhaps to get to a place that is more balanced in terms of fund positions. As such, the market has some repositioning to accomplish. Lower end of November beans now moves up to $8.70, lower end of December corn moves up to $3.35.
On the calendar, USMCA trade agreement goes into effect today. The USDA May census crush will be released as well, with advertised estimates of 180.7 mbu, which would be the largest crush on record, but down from April's 183.4 mbu number. Oil stocks are expected at 2.372 billion lbs, vs. 2.602 billion in April.
Look to continue to head out with strength for the balance of the day.
LCF is closed tomorrow.
Have a safe and happy July 4th.
TAGS – Feed Grains, Wheat, Soy & Oilseeds, North America
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