July 15

Commentary

Overnight Markets:

Corn -3.0 = $3.970

Soybeans -4.0 = $9.970

Wheat -2.75 = $5.386

News Wire / Trade Talks:

-Brazil to ask for tariff reduction to 30% vs 50% announced last week

-Weekly Export Inspections:

-Russian wheat exports prices rally due to slow arrival of new crop

-Trump threatens 100% tariffs on Russia (We get a lot of fertilizer from Russia)

-EU talking $84 billion in retaliation against US goods which include beef

-Talk Russian wheat yields are coming in lower than expected

-China’s second quarter GDP comes in at 5.2% topping expectations

-Soybean conditions jump 4% to 70% G+E

-Corn conditions unchanged at 74% G+E

-China’s corn and soybean futures markets are up on positive economic news

-Russia’s IKAR consultancy cuts wheat forecast to 84.0 MMT from 84.5

-China’s pork production was up 1.4% last quarter

-Weather:

Commentary:

A warmer extended forecast will be offset by moderate to heavy rains this week. 

Grains are lower overnight on a moderate 4% increase in crop conditions ratings for soybeans.  Corn was steady but already rated higher than last year.  China’s economic growth was higher than expected last quarter.  When their economy is strong, they need more protein.  China imported a record amount of soybeans the last quarter.  Corn imports remain VERY low.  My hope is we strike a deal with China and they buy some US corn. 

Speaking of corn, nice rally off the lows on Monday.  The market gapped lower Sunday night on a bearish weather forecast.  To my surprise the market was trading higher by morning.  Dec corn continued to rally during the day and made a key reversal by the close.  Some are linking the corn buying to unwinding of short corn/long wheat spread unwinding.  That makes sense to me.  I don’t think the funds are ready to exit shorts, but you never know.  Last week’s USDA report was bullish IMO.  The corn market needs to see follow-through buying but as of this writing, corn is down 4 cents. 

Dec Corn

We let our old crop corn go for the best basis we would get.  I sure don’t like the price and will buy it back eventually, but I don’t think corn has seen the low yet.  I’m bullish to very bullish corn long term, but if the market rallied, I was worried the basis would widen out. 

Hedgers can still sell Nov soybeans here at $10.03.  I believe funds are going to jump on the short side for a while and push prices down to $9.75 area. 

Live Cattle and Feeders crash hard on Monday.  The only real negative news is that box beef prices fell hard late last week.  Cash cattle traded higher to sharply higher near $240.  Cash cattle supply is low, but will packers continue to pay up for cattle if box beef prices continue to dip?  The market will likely drift sideways to lower until more is known about cash cattle trade at the end of this week.  Tariff talk is not helping.  There is also rumors USDA will reopen the Mexican border again. 

Posted on Jul 15 at 06:03