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Grain Markets Volatile Post-USDA Report

New Month. Key north hemisphere weather month. Grains are higher. SU is up 3 cents near 8.80. CU is up 2 cents and near 3.44. WU is up 2 cents and near 4.94. US stocks are mixed. US Dollar is higher. Crude is higher. Gold is higher. Financial traders will keep one eye on virus, economy and US and China relations headlines and the other on increase money flow into higher stock trade.

Analyst are still trying to explain USDA shocking US acreage estimates. USDA NASS said they did nothing new and just released the numbers that got from US farmers. Bears feel that USDA will find 1.0 mil soybean and 2-3 mil corn acre over the next few months based on FSA farmer crop insurance data. Most feel USDA NASS lost all credibility after yesterday numbers. Many traders may not now take big positions into futures USDA NASS reports. This also questions WOB ability to estimate US acres before official NASS numbers.

Chinese Ag futures (Sep) settled up 35 yuan, up 1 yuan in Corn, up 51 in Soymeal, unchanged in Soyoil, and down 56 in Palm Oil. Malaysian palm oil prices were up at 2,327 ringgit (basis September) at midsession supported by firmer soyoil and crude oil prices.

U.S. Weather Forecast; Showers and thunderstorms will to occur for another day and a half in scattered form across the Midwest with light to moderate rainfall. The 6 to 10 day forecast for the Midwest is shower and thunderstorm activity mainly confined to Minnesota, Wisconsin, and the Ohio River Valley. One of the largest rainfall changes in week 2 was across the Southeast and in a large portion of the Corn Belt Jul. 10 – 12. The midday GFS model in yesterday’s run overdid rainfall. Last night’s run removed almost all the rain. Ridge building in the center of the U.S. will lead to an increasing need for rain in the Corn Belt in the first ten days of July. The ridge will then likely shift farther to the west. The 11 to 16 day outlook for the Midwest sees ridging occurring bringing below average precip to a good portion of the region. Temps will be above average but widespread severe heat is just seen in pockets.

Some are taking down US 2019/20 and 2020/21 feed and residual due to higher than expected June 1 US corn stocks numbers. 58 pct of the corn was on farm versus 57 last year. Some feel a US 2020/21 corn carryout could drop due to lower acres but near 2,800 mil bu versus USDA 3.323 is still adequate and does not justify CZ over 3.70. US farmer was an active seller of corn on the rally. Corn prices now up to US July weather.

US soybean on farm stocks were 46 pct versus 41 last year. Some feel that US NASS may find 1.0 mil more soybean acres over the next few months based on FSA crop insurance enrolment data. Most dropped US 2020/21 soybean carryout to 374 due to lower acres versus USDA 395. This should support soybean prices. July and August US weather and China buying pace will be key to soybean prices. US farmers should increase cash sales on this rally.

There was not much changes in US wheat acreage numbers. There was a slight increase in US wheat June 1 stocks which increased US 2020/21 carryin. 2019/20 wheat feed use will be lowered to 74 mil bu from USDA 135. Wheat prices now up to global food demand. Wheat futures should follow corn but increase Europe and Black Sea harvest should increase global supplies and limit the upside in prices.

Deliveries were 243 Soymeal; 287 Soyoil; ZERO Rice; ZERO Corn; 16 HRW Wheat; ZERO Oats; ZERO Soybeans; 61 SRW Wheat, and; 516 HRS Wheat.

On USDA Tuesday, funds were net buyers of 3,000 contracts of SRW Wheat; net bought 40,000 Corn; bought 19,000 Soybeans; net bought 6,000 lots of soymeal, and; bought 3,000 Soyoil. We estimate Managed Money net short 47,000 contracts of SRW Wheat; short 243,000 Corn; net long 53,000 Soybeans; net short 46,000 lots of Soymeal, and; short 4,000 Soyoil.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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