AgResource Daily Farm Marketing Advice for Thursday: 1/ No new advice
Pre-Opening 8:30 AM CDT CBOT Futures Calls: Soybeans are called 1-3 cents lower, corn 1-2 cents higher with wheat called 2-4 cents higher.
Good Morning! Mixed are opening CBOT calls with the grains firmer and the soy complex weaker as the market prepares for US tariffs against China on Friday. Central US and world weather leans supportive to the grains, but any sustained recovery will have to wait until after US and China get embroiled in a trade war on Friday.
Preliminary open interest data from Tuesday shows a 12,267 contract decline in corn, a 392 contract increase in soybeans, and a 2,232 contract gain in Chi wheat. Funds appear to be taking some profits on their net short corn position
Deliveries against July futures included 1,046 contracts of soyoil, 281 contracts of corn, 22 contracts of KC wheat, and 468 contracts of soybeans.
Goldman Sachs over the holiday put out a wire that they see commodities as underpriced and likely to finish the year with at least 10% gains. Goldman even stated that much of the US/Chinese trade dispute has been digested and that the downside price risk in soybeans is marginal. Goldman was most bullish on energies with crude oil pushing to a new 4 year high – even with calls from President Trump for OPEC to increase production. WTI August crude oil futures has pushed against $75.00 resistance this morning. The key is that world commodity demand is not retracting, even amid the US inspired trade disputes.
The Central US forecast is a bit cooler but also drier into July 20th. The morning run of the GFS features the best chance of rain in the 12-15 day period, but even then totals will be lite/scattered and largely favor E IA & WI. Temps will be near seasonal averages over the next 10 days. Readings in excess of 90 degrees will be confined to the southern and western Central US.
Net draws in soil moisture lies ahead – substantial draws in some locations – but whether coming dryness changes yield potential will be best seen in crop ratings. Seasonally, ratings tend to erode beyond the middle or latter part of June anyway. The question now is whether this is exacerbated by dryness?
There’s also more attention being paid to corn production issues in Europe & the Black Sea. The crop there has also been sped along maturity-wise amid prolonged bouts of heat. All of France, Germany & Poland, along with a majority of Russia’s Corn Belt, will be completely dry over the next 10 days. The EU has been a growing net importer of corn. Recall Russia was supposed to be a decent net exporter of corn in 2018, but that’s becoming less likely with each week that passes without a weather pattern change.
Gulf soybeans are now offered at a 17% discount to Brazilian origin through the remainder of summer, which in any normal year would spark incredible demand interest. The market is working to maintain non-Chinese export interest, but this spread will stay similarly wide without new trade deals.
Crude is up $.50/barrel at new rally highs. EU milling wheat in Paris is up another €2.25/MT as the market there digests falling EU/Black Sea crop sizes. Malaysian palm oil settled down 18 ringgits.
EU/Black Sea weather and declining world grain stocks are supportive. However, beans will act as an anchor on corn without progress on trade.
