Morning Commentary

Sept corn up ¾ at $4.23

Aug beans down 3 ¼ at $8.85

The DOW is up

USD is stronger

Crude oil down $.20 at $56.02

Good morning,

Corn  prices have tumbled by roughly -40 cents from their mid-June highs. The market struggles to generate fresh new headlines to keep the bulls fully engaged. Weather has arguably become more cooperative in many parts of the country.  The USDA lowered their corn condition estimate from 58% down to 57% rated GD/EX vs. 72% GD/EX last year. Perhaps more importantly is the fact conditions in Missouri are rated just 33% GD/EX; Indiana and Ohio show just 35% rated GD/EX; Michigan 42% GD/EX; Illinois 43% rated GD/EX; Kansas and Minnesota 57% GD/EX; South Dakota 58% GD/EX; Wisconsin 60% GD/EX; Iowa 63% GD/EX. I should also mention, the percent of crop thought to be “silking” jumped from 17% to 35% last week but is still massively behind the historical average of 66% by this time of year. The USDA is also reporting that 5% of the crop is now thought to be in the “dough” stage which is also well behind schedule. With the trade count showing the fund selling 27,000 corn yesterday, they’re now thought to be long 93,100 lots. The short term trend for December corn is neutral-negative. The market is struggling to hold its 50 day moving average (435.5). We haven’t seen sustained trade below the 50 day moving average since mid-May. Rallies capped at 437 leaves the market vulnerable to a drop to 420.5-418.25. Stable action over 449.75 is the minimum needed to provide fresh upside targets.

Soybean  bulls continue to wait patiently on proof of Chinese new-crop buying. The big question is how long the bulls will wait considering the bears are circling-the-wagons and moving closer on more cooperative weather. The USDA left weekly soybean crop conditions “unchanged” at 54% rated GD/EX vs. 70% rated GD/EX last year at this juncture. States snuggling the most are: Ohio 30%; Indiana 36%; Missouri 41%; Illinois 45%; Arkansas and Michigan 46%; South Dakota 47%; Kansas 50%. Soybeans “blooming” are reported at 40% vs. 5-year average of 66%. Soybeans thought to be setting “pods” are rated at 7% vs. 5-year average of 28%. Bottom-line, the U.S. crop is way behind schedule and there’s still a ton of weather risk on the table. The short term trend for November beans is neutral. After spending a brief period above in mid-June, the market appears to be rejecting its 200 day moving average (924.5). Stable trade outside 890.25-920 is the minimum needed to provide fresh trending targets.

Bunge and BP Join Forces to Make World’s Third Largest Sugarcane Processor:  BP Bunge Bioenergy, the name for the partnership, will manage 11 cane processing plants with an annual crush capacity of 32 MMT. I’m told they will have the capacity to produce sugar, ethanol, and electricity via waste biomass from sugarcane. Operating alone, the company will be headquartered in Sao Paulo, Brazil, and from what I understand, Bunge will receive cash proceeds of $775 million as part of the agreement, which it says it will use to cut debt.

Supplies of frozen beef were lower last month according to the Cold Storage Report, reflecting the continued demand for beef. June’s numbers showed that 394.525 million pounds of beef were in the nation’s freezers at months end, a 2.6% decline from May and 12.1% lower than a year ago. I’m told the five-year average drawdown in beef stocks is 5.8 million pounds for the month of June.


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