Written Commentary
SOYBEANS
Soybeans ended higher. Word that China was relaxing covid quarantine restrictions offered support. SN-SU spread hit +185. US domestic cash markets are tight with crushers and exporters trying to increase ownership. C IL flat price is near 17.00. Some grain analyst are suggesting US farmers clean out old crop soybean bins before summer weather and harvest. US domestic cash soymeal basis is also firm helping SMN. Some note that current US central Midwest soil moisture levels are driest the last week in June since 2012. Midday weather added rains for parts of central and east Midwest beyond Monday. Amounts could be .25-1.50 inches. Yesterday, soybeans rallied on hope that it was time for China to begin to buy US soybeans to restock reserves. USDA rated the US soybean crop 65 pct G/E vs 69 expected and 70 last week. Initial SU resistance is near 15.00 with key overhead resistance near 15.25.
CORN
Corn futures ended higher. US end users are trying to buy nearby corn at higher than normal basis levels. USDA NASS acreage and stocks report this week adds to volatility with commercials net short the July and trying to manage risk. Some grain analyst are suggesting farmers to add to old crop sales before the report, month and quarter end and US summer weather pattern. CN-CU spread is near +100 cents. Strong basis has C IL flat price corn bid near 8.20. Some note that current US central Midwest soil moisture levels are driest the last week in June since 2012. Midday weather added rains for parts of central and east Midwest beyond Monday. Amounts could be .25-1.50 inches. Lack of heat could limit the upside in futures. Corn futures have been reluctant follower of higher soybean futures. Some funds have liquidated out of corn longs due to mostly favorable US Midwest weather. Initial CU resistance is near 6.84 with key overhead resistance near 7.00. Latest weather models have a ridge in the west and moves eastward. Where this ridge settles will be key for Midwest July weather. Normally, a tropical storm is needed to replenish Midwest soils in drier than normal years. There is one moving across north South America heading towards central America. USDA dropped US corn crop to 67 pct G/E vs 69 expected and 70 last week. Lowest rated crop is in MN and OH. Highest is in IA, SD, IL, MO, WI and MI.
WHEAT
Matif wheat futures closed higher. GASC tender tomorrow (Aug[1]Sep-Oct). Algerian tender was raised to 740kt from 660kt at a price of $445. Russia will change the export tax calculation to reduce the impact of the exchange rate. If Russia cannot forward price wheat, it may not do any GASC this season. There were reports of a Russian export default of 150-600kt, on contracts that were up to $130 below the market. Russian farmer defaults are also said to be growing. Poland’s Ag Min said the EU’s aim to move 20 mmt of grain out of Ukraine by end July was simply unfeasible and amounted to political posturing. Ukraine war escalation with bombing in east shopping mall added to war uncertainty to Black Sea wheat exports. Talk that most World wheat buyers are short and need to buy wheat offers support. Most look for lower US 2022 spring wheat acres and June 1 stocks from USDA this week. Most of this may be factored in lower prices. WU still not over Mondays high. Wheat futures have dropped on new crop US winter wheat crop harvest, improved US/Canada spring wheat conditions and early start to EU harvest. Parts of Ukraine and SW Russia remains dry.
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