Sept corn -6 ¼ at 5.365
Aug beans -10 ½ at 13.5625
The DOW is Down
USD is Down
Crude oil -.31 at 71.88
Overnight grain markets traded mixed but have turned weaker into the daylight hours. Rains this week are bringing near term relief to some key crop areas in the west and that continues to weigh on sentiment. Weakness in the outside markets over Japan’s covid state of emergency ahead of the Olympics is spilling over to the grains as well. The soybean bull spreads are holding firm from the old crop to the November contract but weaker out into the 2022 contracts. There were 12 soybean deliveries stopped by LDC overnight, the July futures will expire on 7/14 with only 868 in open interest to start the day. Soybean cash remains soft with a general trend of weakening domestic basis that has been ongoing for 2 months although bids remain elevated above historic norms.
In the product trade, meal and oil are both weaker headed into the break with the oil share spread holding steady. Board crush margins are showing 92 cents for August but in the $1.20-$1.30 range for Sept.-Jan.
World Weather reports ‘a ridge of high pressure is being advertised in the U.S. Plains during the second week of the two week outlook today that the market will likely be focused upon. However, before that feature kicks in to reduce rainfall and induce greater heat in the Plains, Canada’s Prairies and the western fringes of the Corn Belt there will be scattered showers and thunderstorms during this first week of the outlook benefiting crops in many areas. Crop conditions in some of the eastern Midwest Corn and Soybean Production areas near and east of the Mississippi from Missouri to Ohio and Michigan look very good.’
Overnight, the corn market was mixed; firm start, soft finish, ultimately finishing about six cents lower by the morning pause. Outside markets are a feature early on ‘reflation’ trade liquidation; the Dow is 500 points lower, the Dollar slightly higher, and bond yields lower. We think such fund activity has exacerbated weather selling in the CBOT complex earlier this week, and no doubt is weighing some early? Weather remains a bear weight around the markets; the 7 day maps still favor N Illinois, most of Indiana, and Iowa (excluding the far western rump). Note this still leaves the droughty Western Belt
with rather spotty coverage, but the current attitude of the market seems to be ‘some is better than none’. CONAB also published their Brazil crop data today; they see Brazil’s full year corn crop at 93.385 million metric tons, which compares to 96.392 mmt prior, but is still well-above most private analysts in
the 85-90 mmt forecast range. Will be interesting to see where the USDA lands in Monday’s WASDE? We do have the weekly EIA later this morning; ethanol production should downtick 1%, perhaps a little more, eyeing hot weather in some places and declining profitability in others. Stocks are likely to keep
building, likely to the tune of about 1% wk/wk. Ethanol futures have generally held-up better than corn this week, implying margins shifted from “breakeven/worse” over the weekend to “breakeven/better” now. Seasonal DDG weakness remains a big obstacle to profitability.
Darren, David, and Elizabeth