By Steve Freed
Soybeans, soymeal and corn closed lower. Wheat closed higher. US Dollar was lower. Crude was higher.
Soybean closed lower. Talk of normal US Midwest 2 week weather offered early resistance. News that China will sell soybean from their reserves also weighed on prices. China has been buying Brazil soybean over the last month vs US. US old crop soybean export sales were only 6 mil bu. This was below trade est and was considered negative due to ongoing uncertainty of US trade with China. Total commit is near 2,044 mil bu vs 2,153 ly. USDA goal is near 2,065 vs 2,174 ly. Most were increasing US demand before the USDA June Supply and Demand report. Key is now demand for US soybean exports and US summer weather. Recent drop in South America currencies could trigger increase crop acres and production in 2019. This could cut into US demand and raise US carryout. Some feel SX8-SX9 spread could be indicator of whether US supplies are increasing or declining.
November 2018 soybean minus November 2019 futures spread chart
Corn futures closed lower and lowest level since Feb. A favorable US 2 week weather forecast offered resistance. Open interest continues to rise. Open interest increased from Jan lows in part as funds added to longs due to lower South America corn crops. Fact USDA est US/World 2018/19 corn carryout lower than expected also added to OI. US farmer was a good seller on the rally. Now open interest continues to increase on the price selloff. US old crop corn sales were near 33 mil bu. This was at the high side of guesses. Total commit is near 2,177 mil bu vs 2,126 ly. USDA goal is 2,225 vs 2,293 ly. Some feel US final exports could be a little higher than USDA est due to the lower South America crop. Key now is the debate between USDA forecast of lower US and World 2018/19 corn carryout and the fact US 2018 corn crop is off to the best start ever. Next 3 weeks could be key to prices. Weather will determine US yield that could determine the final carryout. Trade issues between US and EU, Mexico and Canada could also determine demand for US corn. Trade Issues with China could determine their demand for US corn products and meats. Long term, lower South America currencies and normal 2019 Weather could increase their corn supplies from this year. Some feel CZ8-CZ9 spread could be indicator of whether US supplies are increasing or declining.
December 2018 corn minus December 2019 futures spread chart
Wheat futures closed higher but off session highs. Lower Dollar and talk of lower 2018 crops in Russia, EU and Australia may be offering support. Weaker soybean, soymeal and corn prices due to favorable outlook for US crop and talk of lower China demand may have offered resistance. US wheat export sales were near 9 mil bu. Total commit is near 155 vs 243 ly. USDA goal is near 925 vs 910 last year. Dry weather in parts of Russia, Australia and EU may be helping prices today. WN support 5.15. Resistance is near recent highs near 5.54. Some talk about some quality issues with the China wheat crop. USDA has China beginning wheat stocks near 126 mmt, 2018 crop near 129, demand near 120 and end stocks near 138. China is 52 pct of total World wheat stocks. KC July near season high over corn. Spread direction could be key to if market feels World wheat supply is declining.
KC July 2018 wheat minus July 2018 corn futures spread chart
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