Grains Lower as Crops Need Water
Grain calls are marginally lower. SN is down 1 cent and near 8.66. CN is down 2 cents and near 3.27. WN is down 3 cents and near 4.93. Stocks are higher but concern of a second outbreak of the virus still offers resistance to commodity and stock values. US Dollar is higher. Crude is lower. Gold is lower.
Corn futures continue to consolidate in a trading range. Next few days starts the weekly cycle for demand. Today, US ethanol data should show slow rebound in production and continued drop in stocks. Overall demand is still below pre virus levels and suggest demand for corn for ethanol is still lower than is needed to drop supplies. Weekly export sales tomorrow could also be below pace needed to reach USDA goal. US 7 day weather outlook looks favorable for crops. Key is July weather. Carry in futures suggest adequate supply and need for farmers to store their supplies.
Soybean futures remains in a broad trading range. Soybean futures have found support from China buying US. Recent US NOPA soybean crush data showed US domestic soymeal and soyoil demand better than expected. Fact that there is no carry in soybean futures suggest the need for commercial to buy US farmer supplies to satisfy crush needs. Weekly US soybean export sales pace continues to be behind pace needed to meet USDA goal. US soybean 2020 crop conditions remain above 5 year average. China soybean crush margins have dropped in June versus May.US and South America soybean crush margins have also dropped.
Chicago wheat futures have dropped below 5.00. World wheat trade remain slow. Some feel virus impact of buyers economy had slowed buying. Fact that Russia will not extend export quotas into July weighed on prices. Despite concern over Russia crop and their high prices, World north hemisphere harvest is also weighing on futures. US supply is adequate but US export prices are competitive. Early SRW yields in KY are well below expectations. Suggesting freeze may have damaged the crops more than expected.
On Tuesday. Managed Money were net sellers of 7,000 SRW wheat, sold 1,000 corn, sold 2,000 soybeans, sold 1,00 soymeal and bought 2,000 soyoil. We estimate funds are net short 34,000 contracts of SRW Wheat; net short 297,000 Corn; net long 25,000 Soybeans; net short 53,000 lots of Soymeal, and; are net short 3,000 Soyoil.
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