MORNING MARKET UPDATE
Futures Prices 9:45am CT
Overview
Grains start off today trading mixed, after initially trading lower. With pressure coming from the rainfall over the weekend. Rainfall over the weekend turned out as expected for the most part. With rains in in the north and northwest areas of the corn belt.
With prices rebounding here early this morning at 9:00am. Both corn and soybeans holding above their 20-day moving averages.
Today's Main Takeaways
Corn
Corn trading slightly lower the start off Monday morning. Pressured by the weekend rainfalls across a few key areas of the corn belt. To go along with weak Chinese demand and Ukraine exports.
On the other hand, weather forecasts still remain supportive ass forecasts still look and dry for the most part. There is also rumors that EU could see an even larger drop in production. Potentially -10 to -15 million metric tons. The USDA currently has EU crop at 68 million metric tons as their estimate. Some are thinking we may see numbers close to 58 or even lower.
The Ukraine situation is still putting pressure on all markets including corn. Its been a week now since Ukraine sent off its first shipment. Announcing they will be sending off two more shipments this morning. Bringing their total to ten shipments.
The first shipment from Ukraine was supposed to arrive in Lebanon Sunday. However, it still hasn’t arrived, with no explanation.
Friday’s we will see the highly anticipated USDA Supply & Demand report. Which historically has a major impact on the markets at this time during the year. Will be interesting to see how everything shakes out, and where yield comes in at.
Last year we saw production lowered. Cutting U.S. yield from 179.5 to 174.6 bushels per acre. This resulted in prices dropping around -$1 over the course of the following weeks. However, prices eventually found a bottom and saw a massive rally.
Soybeans
Soybeans lower this morning, trading up and down this morning. Was trading a few cents higher this morning, now trading a few cents lower.
Pressure coming from the rains over the weekend. However, weather still remains supportive looking forward. With forecasts showing extreme temps and la ack of precipitation. Which could suggest we will see a lower yield. To go along with talk of Chinese buying, tensions between China and the U.S. have cooled off compared to last week.
Similar to corn, all eyes will be in the USDA report Friday. As traders position themselves ahead of the report.
Last year we saw the USDA lower its U.S. yield forecast from 50.8 to 50 bushels per acre. In the following weeks, the market dropped roughly $2. Similarly to corn, soybeans found a bottom and posted a massive rally after the decline.
Soymeal & Soyoil
Soymeal down -3.4 to 401.7
Soyoil up +1.25 to 65.22
Wheat
Wheat has been mostly pressured by the Ukraine export headlines, as well as U.S. harvest. Today we saw reports that two more shipments will leave Ukraine today. One containing 11, tons of beans, and one containing 48,000 tons of corn. This will be the tenth shipment since last week.
Three Ukraine ports are now up and running. They announced that they have the ability to export 3 million tons per month, and are expecting to export newly harvested week soon.
Wheat prices continue to sit around the bottom of their recent trade range. Many would like to see us find a bottom here sometime. But often, this takes longer than expected.
There is production concerns in the EU as well as lowered production out of India. On the other hand, we could see more more downside as Ukraine continues to export, and Russias crop is turning out bigger than originally expected.
Other Markets
Crude oil is now below $90 currently sitting right around $89. This is after being above $100 not too long ago. Crude prices are at their lowest since March.
Cotton slightly higher this morning. +0.39 to 96.52. Contract high was made back in mid May, at 133.79
Dow up +233
Dollar Index down -0.42 to 106.07
China & Taiwan Update
Tensions between the U.S. and China have cooled off for the most part, after Pelosis visit to Taiwan last week. China is extending its military exercises around Taiwan. Which has raised concerns about potential conflict surrounding global trade.
Spec Funds
Last week spec funds became net buyers. This is after the nonstop selling we've seen for months, basically since April. This was one of the largest factors in helping us see a strong close to the week.
Funds bought 9,133 net contracts of corn and 11,795 net contracts of soybeans. While remaining sellers of wheat for all three classes. Extending their position to -15,000 contracts of Chicago.
News
Chinese soy imports slowed in July. Importing 7.9 million metric tons, down -4.5% from June and -9.1% from last year.
China posts record trade surplus in July. Hit a record high of $101.3 billion in July. This is driven by an 18% increase in exports, and a 2.3% increase over the first seven months of the year.
Chinese meat imports slowly increasing, but still down from last year. Increasing 6.7% from June. But down -24.7% from last year.
Weather
Source: National Weather Service