- The delayed Commitment of Traders report offered no real surprises and confirmed continued liquidation/selling in the Ag trade. Through last Tuesday, funds had added 10,500 contracts to their net short corn position and sold another 9,600 contracts in soybeans. In wheat, funds covered 10,500 contracts in Chicago, liquidated 13,600 contracts in Kansas, and sold another 2,800 in Minneappolis. Funds also liquidated 7,000 soymeal and covered nearly 875 short contracts in soyoil. Net activity across the ten principle ag markets was selling of 25,600 contracts, driving the net short position to 121,524 contracts, the largest net short since January.
- Soybeans were lower overnight and selling continued into Monday’s close, leaving futures down 21- 23 cents. The ongoing Chinese trade dispute along with the upcoming July WASDE report has made navigating the soy markets difficult. And the US/China trade war could still ramp up with President Trump likely to add new tariffs. After the close, NASS reported that 71% of the soybean crop was rated as either good or excellent, on a national basis. A 10 point drop in the NC crop lowered ratings there to 45% good/excellent for the lowest state rating, while there were three states tied for the highest rating. Crops in KY, NE, and TN were all rated at 83% good/excellent. Other notable changes were a 9% increase in the SD crop to 68% good/excellent, while the LA crop gained 6% to 54% good/excellent. The IL crop had been as high as 83% in early June, was down 6% last week to 72% good/excellent. The July WASDE report is likely to leave yield unchanged, but will adjust to the NASS acreage figure. The market is anxious to see how the USDA handles US trade and price estimates.
- Lower overnight trade in corn gave way to selling right from the morning open. Friday’s low held, and while 4 cents over the morning low, Dec corn finished down 6 cents. NASS reported a 1% decline in national good/excellent ratings for last week, with 1% of the crop slipping from the good category, while 1% was added to the poor. However, just 7% of the crop is rated as poor/very poor versus 10% last year. The US weather forecast holds limited rains across the Cornbelt in the coming week, but models have pared back the extreme heat projected late last week. This will limit a significant drop in crop ratings to mid-July. The CoT report showed that through Tuesday, funds were net short 70,810 contracts (-10,491) or the largest net short position since February. The US export program remains strong, with healthy livestock and ethanol demand. The drop in soy values is holding corn prices at historically cheap levels. It is the feedgrains that hold the best Ag story.
- Wheat futures ended lower, but the market remains supported relative to neighboring summer row crops. EU milling wheat futures ended a bit weaker. Black Sea cash prices have rallied $4/mt from the early July low. World wheat markets are digesting falling major exporter supplies, which will likely be lowered again in Thursday’s WASDE release. EU markets are leading other values higher. Spot Matif is quoted at a $31/mt premium to Chicago, an historical extreme. The EU market has been trending higher in recent weeks. The boost in futures and relative stability in the €uro have allowed Gulf wheat to become much more competitive in the world marketplace. Breaks are opportunities for end users to extend coverage. Dryness has returned to Australia, and appears set to persist into late July. The rapid warming of the equatorial Pacific elevates the risk of sustained dryness in Australia through autumn. US spring wheat was rated 80% good/excellent which has traders expecting a bearish US supply surprise on Thursday. It’s the post report reaction that is key.