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Morning Comments

July corn +8 ½ at 6.9925

July beans +11 ¼ at 15.3425

The DOW is UP

USD is Mixed

Crude oil +.30 at 70.26

 

Good morning,

 

Overnight grain markets were firmer in corn and the soy complex while wheat traded lower. It is going to be a busy day for the grain trade with plenty of fresh fundamental data for the markets to digest including CONAB’s Brazilian forecast, weekly export sales and the USDA monthly crop report at 11 am cst and of course, the latest weather forecast changes.

The soybean bull spreads are weaker despite the higher flat price on the board. Domestic basis remains soft and the index fund roll continues to weigh on the front end of the curve while weather uncertainty supports the new crop.

Brazil’s CONAB reduced its forecast for total corn production by 10 mmt to 96.38 mmt (USDA 102.0 mmt last) while it raised its soybean production est. by 460 tmt to 135.86 mmt (USDA 136.0 mmt last). Corn exports were lowered from 35.0 mmt to 29.5 mmt for 20/21 while soybean exports were raised from 85.6 mmt to 86.65 mmt.

Weekly export sales were not expected to be strong, and the report matched that expectation. China bought a cargo of old crop corn along with 18.8 trb of cotton, 2.3 tmt of beef and 8.1 tmt of pork. Most of the old crop soybean business was moved out of previously announced unknown sales leaving just 16 tmt of new sales. New crop soybean sales totaled 105 tmt going to Hong Kong, Taiwan and unknown. The meal and oil sales were unremarkable and to the usual suspects.

Old crop soybean sales on the books stand at 3.808 mmt with China earmarked for 692 tmt and unknown for 1.2 mmt. Accumulated exports have reached 57.745 mmt. Combined sales plus shipment total 61.553 mmt or 2.261 billion bushels representing 99.1% of the USDA projected 2.280 billion bushel program with 12 weeks remaining in the marketing year. New crop commitments have grown to 7.556 mmt compared to 1.730 mmt this time last year.

USDA monthly crop report comes out at 11 am cst. The USDA will revise old crop demand on the balance sheet and take another look at Southern Hemisphere crops. The corn balance sheet appears more susceptible to tightening in both the domestic and world carryouts; more so than the soybean S&D for this report and that is reflected in the trade estimates shown below. They will not address new crop production until the 30th with the updated acres in addition to the quarterly stocks report.

 

Overnight, the corn market was mixed to start but tended to firm into the wee hours of the night, ultimately finishing 8 cents higher in July and 4-5 cents higher elsewhere by the AM break. Busy day with three reports. First up was Brazil govt’s crop report (CONAB), which revised lower the country’s full

year corn crop to 96.4 (vs. 106.4 prior). Private analysts are either side of 90 mmt? Next up is the weekly export sales report, which were relatively minimal, but at least old crop was a positive number, which is probably more important than the new crop miss. Old crop sales were 189,600 metric tons (Japan #1 buyer, plus cargo booked to China), while new crop was just 26,400 mt. Last but not least, we have the USDA’s monthly crop report due later this morning. The June WASDE rarely generates controversy but USDA curveballs can always be thrown. The primary focus for the markets will likely be world data, particularly Brazil. USDA should continue to slow-walk Brazil lower (they were 102 in May vs. 109 in April)? Other minor tweaks are possible, both world and domestic. We think recent EIA reports are indicative of higher ethanol production, but it may be one month too early for the USDA to report it. World carryout is likely to slide, with Brazil dips unlikely to be offset by increases elsewhere (Argy, South Africa)? Expect a quick ‘refocus’ on weather shortly after the USDA release, and we do not see much change in that outlook from that discussed most of this week (dry for most, warm for some).

 

Darren, David, and Elizabeth

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