Grains Report - Thursday, June 4

WHEAT
General Comments: Wheat markets finished higher as the weather seemed to improve in Russia. Black Sea prices are holding stronger as Russia has run out of old crop Wheat to sell into the world market. Any sales by producers will be in the domestic market where the prices are higher. It was a week of mixed weather news as Russia got good rains in just about all areas but parts of Europe and the western Great Plains of the US stayed dry. The weather is also good in Australia and has been good for planting in Argentina although Argentina has also been drier than normal. Frequent showers are being reported in most of Australia. The big weather feature is the dry weather in Europe and the US and this dry weather has been supporting world prices and futures price action. Competition for sales is expected to be tough even with less in the US and Europe as Australia is coming back after years of drought and as Russia has better weather and improved production prospects. The harvest, small or big, is coming and prices usually start to move lower soon and remain down through the harvest. Any rally at this time might not go much farther.
Overnight News: The southern Great Plains should get dry conditions. Temperatures should be near normal. Northern areas should see scattered showers. Temperatures will average near to below normal. The Canadian Prairies should see mostly dry conditions. Temperatures should average below normal.
Chart Analysis: Trends in Chicago are mixed. Support is at 507, 501, and 496 July, with resistance at 522, 524, and 528 July. Trends in Kansas City are mixed. Support is at 457, 4412, and 439 July, with resistance at 467, 472, and 477 July. Trends in Minneapolis are mixed. Support is at 504, 502, and 497 July, and resistance is at 526, 534, and 538 July.

RICE
General Comments: Rice was a little lower in new crop months and sharply higher in old crop July. The funds are buying the old crop futures on ideas of supply tightness and there is little old crop Rice left in first hands to temper the rally. Mills are also not selling July although they own Rice and neither are exporters. The combination of good export buying in general and the buying inside the US due to the Coronavirus has made the market short Rice. There are ideas that the mills are well covered into new crop, but little Rice is available from producers. Most of the unsold Rice is in Arkansas. The crops are in very good condition in the south and near the Gulf Coast but planting has been problematic in parts of Mississippi, Arkansas, and Missouri. However, USDA data shows that these crops are getting planted and are thriving. Ideas are that the long grain will get planted and producers will not plant medium grain if some prevent planting is needed. There are still ideas that the US will have a much bigger crop to harvest this Fall. July appears destined to test the highs made by the May contract and could have a final objective of $23.50 based on the monthly chart patterns.
Overnight News: The Delta should get scattered showers. Temperatures should be generally above normal.
Chart Analysis: Trends are up with no objectives. Support is at 12040, 2028, and 2016 July, with resistance at 2068, 2080, and 2092 July.

CORN AND OATS
General Comments: Corn was about unchanged on the day. USDA showed good progress and very good condition for the Corn crop this week and an above-trend yield is being forecast by many analysts. Meats processors are back and are aiming to restore 80% to 85% of capacity kill rates in their plants. The backlog of Cattle and Hogs will slowly disappear under this scenario and meats wholesale and retail prices will fall. This will take some time, but it is starting to come to pass especially in the wholesale meats trade. Ethanol demand is also improving as lockdown orders are lifted in most states and in Europe. Demand for gasoline and ethanol has gotten a little stronger and should continue to improve over time. All this still implies that ending stocks for Corn as projected by USDA can increase, but the increase should not be as great as originally thought. Export demand is becoming more difficult with US prices quoted above those in Argentina and Ukraine. Corn can rally a little more before the current seasonal rally runs out of steam and as the funds still hold a significant short position and as farmers are scale up selling into the rally.
Overnight News:
Chart Analysis: Trends in Corn are mixed to up with objectives of 346 July. Support is at 321, 319, and 315 July, and resistance is at 330, 332, and 340 July. Trends in Oats are mixed. Support is at 326, 323, and 320 July, and resistance is at 335, 339, and 342 July.

SOYBEANS AND PRODUCTS
General Comments: Soybeans were higher as Chinese demand came once again into question. During the day the wires said that unknown destinations had bought 186,000 tons of US beans. China is looking to curb the dissent in Hong Kong over moves to bring the city more under central government control from Beijing. The world has objected and the US has now imposed some additional sanctions on the country. The sanctions seem designed to keep trade flowing between the countries but the Chinese moves might upend all of that. China has remained a very active buyer in South America even as it has increased Soybeans buying here in the US, so the overall amount taken from the US might not match the hopes of the trade. Brazil prices have been creeping higher for the rest of the world as it starts to run out of Soybeans to export, so China and the rest of the world will look to the US and Argentina for additional supplies.
Overnight News: USDA said that 120,000 tons of US Soybeans were sold to unknown destinations.
Chart Analysis: Trends in Soybeans are mixed to up with objectives of 867, 869, and 885 July. Support is at 846, 834, and 818 July, and resistance is at 862, 868, and 877 July. Trends in Soybean Meal are mixed. Support is at 282.00, 280.00, and 277.00 July, and resistance is at 286.00, 288.00, and 290.00 July. Trends in Soybean Oil are up with objectives of 2840 and 3020 July. Support is at 2750, 2720, and 2690 July, with resistance at 2820, 2860, and 2960 July.

CANOLA AND PALM OIL
General Comments: World vegetable oils markets were higher. Palm Oil closed higher on ideas of reduced production and reports of better export demand. Palm Oil has been hoping for better demand from importers as world economies slowly open after being closed by the Coronavirus epidemic. A government change in Malaysia helped open the Indian market to Malaysian imports again. China is also buying. Southern Malaysia producers reported a sharp drop in production and there are ideas that all of Malaysia will come in below previous months. Indonesia continues to focus its Palm Oil on internal demand for bio fuels. Canola closed a little higher on Chicago and despite improved growing conditions in the Canadian Prairies. Canola has found support from the recent recovery in Soybeans and Soybean Oil along with a weaker Canadian Dollar. Canola is more of a food oil than the others, although it also has bio fuels uses. A BC judge ruled against the release of the Huawei executive last week and this renewed trade tensions between Canada and China. The weather has been warmer the past couple of weeks after weeks of cold and wet weather.
Overnight News:
Chart Analysis: Trends in Canola are down with no objectives. Support is at 459.00, 456.00, and 452.00 July, with resistance at 465.00, 468.00, and 470.00 July. Trends in Palm Oil are mixed to up with objectives of 2340 August. Support is at 2380, 2270, and 2240 August, with resistance at 2510, 2590, and 2860 August.