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Morning Commentary

July corn down 7 at $4.1825

July beans down 6 ¾ at $8.75

The DOW is up

USD is weaker

Crude oil down $.79 at $52.69

Good morning,

Corn bulls have struggled to break prices out above the recent highs. Bears are pointing to the more likely possibility of tariffs going into effect against Mexico, associated complications with ASF, windows of opportunity for continued U.S. corn planting, and continued fears of demand destruction associated with higher prices. There’s continued rumors of South American corn being imported into the U.S. as logistics and higher prices complicate U.S. corn movement. Technical guru’s point to the fact open interest has fallen and trading volume is somewhat light for what many professional traders would have suspected to see in this environment. The short term trend for July corn is bullish. Stable trade over 438 leaves the market in position to trade 459.5. Closing under 418.5 signals a correction.

Soybean bulls could be a bit ahead of themselves fundamentally, but I’m personally starting to get more on the bandwagon. I still think the big bull run won’t happen until further out on the horizon, but absolutely see no reason in trying and get cute with timing the short side of the trade. The short term trend for July beans is bullish. Stable action over 893 signals a run to 909.5 perhaps 920.25. Closing under 863.75 alerts for corrective action.

Earlier this year during a truce in the trade war with the U.S., China purchased 14 MMT of soybeans. At the moment, there are still 7 MMT that need to be shipped, and though that has challenges of it own, many are surprised China is holding to their commitment. From what I understand, once the logistics are overcome, they plan to stockpile the beans, which experts take to mean they are planning for a potential long-term battle.

With U.S. corn planting well behind schedule, ADM and other grain traders have turned to SA for those who are planning on shortages this fall, as well as lower prices compared to the U.S. From what I understand, Smithfield Foods likely ordered between five and 10 corn shipments from Brazil, which are expected to be loaded between September and January. I’m told a Reuters source said that Paraguay and Argentina are also shipping corn to the U.S. It was nearly seven years ago that the U.S. last imported a significant amount of Brazilian corn. 

 

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