MARKET UPDATE

Futures Prices Close

Overview

Overall poor day for the grains as corn takes a hit. Soybeans led us higher. After being down double digits and posting a new low, they rallied back to close higher.

Grains saw some pressure surrounding the political news. Trump is probably going to win the election. As you all know he chose JD Vance as his VP. So this pick solidifies what he wants to do with tariffs.

Today JD Vance gave a speech in Milwaukee which added pressure to corn & beans.

In his speech he said that Biden supports normal trade relations with China and they disagree with that. Vance said he sees China as the biggest threat to the US. So grains see this as a negative due to the potential relationship issues with China it could bring. China is of course by far the biggest buyer of US grain.

Along with this, Vance does not want to continue funding Ukraine for their war and ag. The US has been a huge funder for both, helping Ukraine remain more competitive on the global corn & wheat market. So if we no longer fund them, it could be slightly friendly for demand but isn’t going to make a major difference immediately.

The other big news was China. Unknown (most likely China) FINALLY bought old crop US soybeans. 510k MT of new crop beans & 150k MT of new crop meal.

So this was friendly and probably part of the reason beans bounced back today. It is good that we are finding some demand at these lower prices.

However as you all know we currently have the worst new crop book of sales ever. But this means they can’t get worse from here. Until today China has bought virtually zero US beans. Something to keep in mind is that we do typically see China start to ramp up on sales from July and into August.

Looking at weather, it is still bearish.

The next week lacks rain for the corn belt as most of it will be kept south, but it is suppose to be cooler than normal. So pretty much ideal for now.

5-Day GFS Precip

10-Day GFS Precip

10-Day Temp Anomaly

As I mentioned in my past updates, the normal weather market is gone. So we won’t go up or down on every little change we see in forecasts. So although it is bearish, it is not a major market mover anymore.

This also means we do not have a chance for a weather scare as I've mentioned before. Unless we get some crazy event in early August, beans could still potentially see a small scare. But the outlook for August looks ideal right now. So very doubtul.

Despite weather from now on not mattering much to the trade, the past weather we have seen still does. We still had the wet start, flooding, hail, derecho damage etc. However no one will know the extent of damage any of those events brought until at least fall.

Today's Main Takeaways

Corn

Weekly exports were weak. 437.8k MT, down -19% from last week and -10% below the average. So that didn’t help prices today.

As I mentioned, JD Vance's comments didn’t help corn prices either.

The weather is ideal, although turning into a non-factor for the most part.

Currently we are simply range bound, waiting for the technicals to flip one way or the other.

Here is an hourly chart from Blue Line futures this morning and you can see what I mean.

We are trapped between $4.03 and $4.12 (which is our June 28th USDA report day lows).

That $4.12 area is a big area for Dec corn. That is our first short term resistance.

A break above that level would be a good sign and open the door to $4.26.

Then that $4.26 level is massive. Our July 2nd highs.

That is a trend changing level. If we get above that, it would change the trend and mean a bottom is in is likely.

However, you cannot say the bottom is in for sure until we break $4.26.

Looking at the downside, $4.03 is a MUST hold.

We have bounced off that level several times the past week.

If $4.03 does not the hold, the implied downside move from the wedge we are in is another -23 cent drop. Down to $3.80

(The implied move is calculated by taking the July 2nd highs of $4.26 down to the $4.03 lows, which is 23 cents)

Until we break $4.03 or $4.26 we are likely range bound.

Looking farther up, the $4.46 level is probably the area that would cause the funds to get scared and start covering. That is our Feb lows.

All of these levels are outlined in my chart.

(Keep in mind, the algos also might try to set a bear trap at $3.99. As they like to do that. But anything much under $4.00 would bring additional downside.)

Dec Corn

Tomorrow will be a big day for both Dec & Sep corn and the weekly closes.

If Sep corn cannot hold $3.90 we could easily see another -20 cents of downside fairly quick. As the implied move lower is the $3.66 range.

If we hold, it will be a good sign. As we have bounced off that level several times.

Basically the same story as Dec corn for Sep.

First resistance is $4.00. The trend changer level is $4.14. The must hold is $3.90.

Sep Corn

Here is the updated comparison for 2014.

In 2014 we did not bottom until October. We fell all the way to $3.18.

However, by the end of the year we rallied $1.00 all the way back to nearly $4.20.

I do not think $3.18 happens, but until we get technical confirmation that the bottom is in (Dec corn above $4.26) anything is possible I guess.

Short term, I do not what the future holds. We could either bounce here and start our leg up. We could get a small bounce and continue to be range bound for a while. Or we could fail to hold support and lose another -20 cents. I would also be lying if another -50 cents of downside was impossible.

Now although yes we could go lower from here. I don’t think we are just going to be stuck at $3.50 or worse corn for the next 4 years like some think could happen.

Short term. My guess is we remain in a chop for a while between $4.03 and $4.26.

I am waiting for the technicals to give us a direction past either of those levels.

Longer term. These lower prices are already starting to create more demand. This will create higher prices and opportunities. But the question is how low can we go beforehand?

IF YOU ARE UNDERSOLD, HAVE TO SELL OFF THE COMBINE AND ARE NERVOUS PLEASE USE PUTS TO PROTECT YOUR UNPRICED GRAIN.

If you are someone who is ballsy and can handle swings and wants to be aggressive, you could look at courage calls. However, I would keep a stop just under $4.00 (as the algos could give us a bear trap just to see the $3.99 print). Or perhaps wait until we see the break above $4.12 resistance. However, this strategy is not for everyone. For the majority of you, I do not like being "double long". Depends on who you are & your risk/reward tolerance.

Give us a call or text if you want to talk. (605)295-3100

In yesterdays audio we went over a bunch of different strategies based on how to play your marketing depending on your situation you are in. You can listen to that HERE

Lastly, one thing to note is seasonality. Seasonally we go lower from here until end of August. I think this year we will get a counter seasonal rally led by demand. But you need to be comfortable no matter what direction we go.

Here is a seasonal chart and what a short position in corn returned in previous years on this date until August 31st from Blue Line Futures.

Soybeans

Soybeans finally show some strength. Closing +11 cents off the early lows.

The biggest news is still the potential trade war.

Last trade war we saw $8 and $9 beans.

So there is obviously a ton of downside risk if this trade war comes to fruition and has the same negative effect as the last.

However, looking shorter term. Before today, China had zero new crop beans booked. Trump is going to win and potentially start a trade war. Which means it would make sense for China to start booking a lot of beans now. Which is something I mentioned Tuesday.

Today China finally bought some. Which was great news. Yes we will need a LOT more, but it was nice to see.

The trade war could very well be super negative and lead to beans starting with a $9 or lower. On the flip side, the trade war could wind up being somewhat positive if Trump initiates phase 2 of the trade war. Meaning he would hold China accountable and force them to make a certain number of purchases. That would be friendly.

Exports to China accounts for roughly 25% of all soybean demand for the US. That is a massive amount.

If China continues to step in here, a few more flash sales could get this bean market moving higher pretty fast.

For me to confidently say the bottom is in, it would take a pretty big rally. I am looking at the $10.94-97 level for Sep & Nov beans.

If we could get back to $11.00 on those it would look great.

If you look at the continuous soybean chart, $10.50 to $11.00 is a key range. In past years, we have either bounce off of it, or blown past it. In previous years it also acted as heavy resistance.

I do not know the exact effects this trade war will have. It could super bearish, or wind up being somewhat friendly long term.

All I know is that with this, there is a lot of downside risk.

So protect that risk.

Weather could provide some support if it gets hot and dry in early August, but right now the forecasts look like they offer rain. So weather for now is still bearish.

IF YOU ARE UNDERSOLD OR HAVE TO MOVE STUFF OFF THE COMBINE, KEEP PUTS ON UNPRICED GRAIN.

Short term I do think we get a nice pop, but only if China comes in here and starts to buy soybeans like they should.

Nov Beans

Wheat

Disappointing day for wheat, closing off the highs.

However, Minneapolis wheat rallied today. It looks like some of the heat in the Canada area is raising some eyebrows. Some areas in Canada broke all-time heat records today.

We have been seeing some decent demand news. Not directly business to the US, but globally.

Wheat buyers in Asia are buying a lot of wheat. We have China, Thailand, Vietnam, and others all buying wheat from the Black Sea.

Egypt also made their biggest wheat purchase since 2022 this week from Russia.

So no, the US did not get any of this business. However, it does show that lower prices are helping create more demand globally. As global wheat prices are sitting at 4 month lows.

Outside of that, nothing else really for the wheat market.

I would like to think we are close to bottom, but don’t want to try and catch a falling knife.

For me to more confidently believe we found a bottom, I need us to get above $5.56 which is +20 cents away.

If you did not make sales on our May sell signal or are still behind on sales, as I have been mentioning for months. I still like keeping a floor under unpriced grain.

If you did makes sales on our signal, I don't think you have to do anything right now. You could perhaps look to re-own here as there is good risk to reward, but nothing wrong with walking away.

Sep Chicago

Sep KC

Want to Talk?

Our phones are open 24/7 for you guys if you ever need anything or want to discuss your operation.

(605) 295-3100

sfrost@dailymarketminute.com

Hedge Account

Interested in a hedge account? Use the link below to set up an account or shoot Jeremey a call at (605)295-3100 or Wade at (605)870-0091

LEARN MORE

Check Out Past Updates

7/17/24

DEMAND, CHINA, POLITICAL PRESSURE, & TECHNICALS

MARKET UPDATE

Overview

Today's Main Takeaways

Corn

Soybeans

Wheat

Want to Talk?

Hedge Account

Check Out Past Updates

DULL MARKETS: STRATEGIES TO USE IN GRAIN MARKETING

DIFFERENT GRAIN MARKETING SCENARIOS YOU MIGHT BE IN

HARVEST SALE

MONDAYS AUDIO

TUESDAYS AUDIO

WEDNESDAYS AUDIO

THURSDAYS AUDIO

THIS WEEKENDS MARKET UPDATE