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Ag Markets React to China Vote on Hong Kong

Grains are mixed. SN is down 1 cent and near 8.47. CN is up 1 cent and near 3.21. WN is up 3 cents and near 5.07. US stocks are mixed. Crude is lower. US Dollar is lower. Gold is higher.

Today commodity and equity markets are watching closely US reaction to the fact China has voted to take control over Hong Kong. Rich China people have an estimated half of Hong Kong private wealth that is near $1 trillion. There is talk that they may try to move that wealth out of Hong Kong.Recent uptrend in Soybean prices and new lows in soymeal has pushed oil share to 3 month high and crush margins to 1 month low. Question is will China buy US soybeans? Yesterday China was a buyer of Brazil soybeans.  Domestic US soymeal use continues to slip lower. There is some profit taking in soyoil overnight. China canola oil futures are higher on talk China may reduce Canada imports. Brazil farmer remain a slow seller due to higher currency. Some estimate Brazil virus cases could be as high as 5 million.

Corn and KC wheat is finding some support in the US Midwest and plains 2 week forecast. A ridge of high pressure will develop next week. Rain will be limited to Great Lake state and SE. The ridge is expected to move back west after the first week in June. Some feel that the ridge will not impact US HRW crop or the corn crop.

Corn traders will be watching today’s energy news on gas demand and ethanol production. Both South America and Black Sea new crop corn prices are below US. This could limit US corn exports.  Russia old crop wheat prices remain high but there was some export interest in new crop prices. Russia domestic flour prices are tending lower but still high. EU weather remains dry in west and rains in east. Black Sea weather is improving.

Managed funds were net sellers of 2,000 contracts of SRW Wheat; bought 4,000 Corn; net bought 2,000 Soybeans; sold 2,000 Soymeal, and; net bought 2,000 Soyoil. We estimate Managed Money net long 11,000 contracts of SRW Wheat; net short 251,000 Corn; net long 16,000 Soybeans; net short 31,000 lots of Soymeal, and; net long 7,000 Soyoil.

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