- Following mixed markets overnight, soybeans turned down shortly after the morning open on Wednesday in follow through technical trade. Markets settled 9-11 cents lower for the day with commodity fund traders estimated as sellers of 9,000 soybean, 3,500 soymeal, and 3,000 soyoil contracts. The midweek Brazilian vessel lineup was fractionally lower from a week ago as some shipment dates were rolled into July. However, June shipments are still expected to be close to 9 million mt versus last year’s 7.5 million while the July lineup is now showing 1.5 million mt. With the USDA’s Quarterly Stocks and Acreage reports just a week away, we would not advise a bearish stance now. Note that November beans today are $1.80 cheaper than a year ago.
- Corn fell a shade in lower than average volume, and the trade is left pondering the market’s next move. Crude fell $.80/barrel and continues to flirt with chart-based support. This week’s ethanol update is viewed as slightly negative as production fell and stocks remain perched well above recent years. The Midwest weather forecast is void of any excessive heat through the next ten days, but meaningful precipitation through the period looks to be somewhat scarce in nature. Also there is no evidence that drought conditions will improve across the N Plains. Weather models today lean neither bullish nor bearish, and we should keep in mind there are growing yield concerns in W Europe and the Black Sea as heat expands eastward across the European continent in the next few days. Recall that the US in July of 2016 shifted to a rather wet pattern, and a similar shift will be needed this year to maintain yield potential of 170-172 bu/acre. Crude’s recent collapse, along with ongoing political turmoil in Brazil, has weighed on major exporting currencies and thus keeps other countries more competitive in the world market. It is tough to define a trend. Until weather in the first half of July is clarified we expect corn futures to continue in a sideways trend, with support pegged at $3.65 and resistance note above $3.90, basis spot.
- Wheat futures fell 6-8 cents as the Russian ruble hit new four month lows, and on paper this allows Russian wheat exporters to be more aggressive in the world market. Currencies in Australia and Canada also settled a bit weaker, and today was generally marked by commodity liquidation. The weather pattern in Europe and Black Sea into late June remains concerning. The EU and GFS models remain in good agreement that excessive heat and a complete lack of precipitation will move eastward into the Balkan and Black Sea regions by mid/late next week. High temperatures in Romania, Ukraine and S Russia will reach into the upper 90s and low 100s, and already Ukrainian crop potential has been capped by a severe lack of precipitation since late winter. Talk that the US has imported modest amounts of high protein German wheat started the market’s break today, and indeed high protein cash markets at the Gulf do allow imports to pencil, but work suggests major exporter production could be down 20 million mt from last year, which is significant. We doubt the market has fully digested yield loss in the N Plains at this time.