Grains Report - Tuesday, May 26

WHEAT

General Comments: Wheat markets were mixed, with Hard Red Winter futures a little lower and Soft Red Winter and Spring markets a little higher. Improving weather around the world and here at home was the big reason to see some selling hit the markets, but reports that Russia and Europe are turning dry supported the markets. Europe got some rains after a prolonged dry spell and Russia also got a little rain in northern and central areas. The rains in Russia are leaving southern areas dry, but these areas are seeing some isolated to scattered showers now. European areas are drying out again after the rains of a few weeks ago. The US Midwest has also seen a lot of rain and a bumper SRW crop is expected. Reduced production ideas are floated for HRW areas. It has been hot and dry in central and southern areas after a freeze a few weeks ago. The crop suffered Winterkill first and now is suffering under the hot and dry weather. Growing conditions are better now with the arrival of showers in these areas. It has been mostly dry but cold in the northern Great Plains and into the Canadian Prairies but the market is less concerned about production potential for Spring Wheat crops. It was warmer last week.

Overnight News: The southern Great Plains should get scattered showers. Temperatures should be near to above normal. Northern areas should see scattered showers. Temperatures will average above normal. The Canadian Prairies should see scattered showers. Temperatures should average below normal in the west and above normal in the east.

Chart Analysis: Trends in Chicago are mixed. Support is at 503, 501, and 496 July, with resistance at 518, 528, and 535 July. Trends in Kansas City are mixed. Support is at 439, 431, and 428 July, with resistance at 457, 461, and 468 July. Trends in Minneapolis are mixed. Support is at 510, 504, and 502 July, and resistance is at 526, 528, and 534 July.

RICE

General Comments: Rice was a little higher on the weekly charts but showed very little interest in going up or down in a big way. The domestic situation remains tight for the old crop month of July. New crop months have reflected ideas of the greatly increased planted area from producers. Some producers are selling the next crop and some hedge selling has been seen in new crop months in futures but this has dried up as Arkansas has been cool and wet for planting. Mississippi has also had problems planting the crop due to too much rain but the crop in both states is being planted. Demand for US Rice remains generally positive and the export sales pace, in general, has been very good. The ales were great last week at well over 100,000 tons. The weekly crop progress reports showed that southern Rice is emerging well. Some Rice in Texas and Louisiana is in flood.

Overnight News: The Delta should get scattered showers. Temperatures should be generally above normal.

Chart Analysis: Trends are mixed to up with no objectives. Support is at 1591, 1581, and 1562 July, with resistance at 1619, 1637, and 1656 July.

CORN AND OATS

General Comments: Corn was a little lower in quiet trading last week. It is possible that futures have seen at least a short term low. The main fundamental remains demand destruction caused by the lack of ethanol demand and the lack of feed demand. Both have been detrimentally affected by the Coronavirus. The virus has caused states to impose stay at home orders on its people, meaning no one is driving and consuming gas. Some states are starting to open now in the US but the experience in other countries suggests that the people will be very cautious in any activities and really not go out and spend money or hit the stores as before. Driving will be significantly less. Feed demand has been reduced as packers have been forced to shut plants down due to infected employees in the plants. The plants are opening now with some government-mandated protections for workers, but not all workers are back to work and the social distancing requirements mean that less meat can be processed in any case. Cattle and hog producers are seeing much less demand for their products and that has affected feed demand. The Midwest weather is improving after the recent cold spell. It is now warmer with some showers and storms around.

Chart Analysis: Trends in Corn are mixed. Support is at 314, 312, and 308 July, and resistance is at 322, 325, and 327 July. Trends in Oats are up with objectives of 334 and 346 July. Support is at 3020, 315, and 309 July, and resistance is at 327, 330, and 333 July.

SOYBEANS AND PRODUCTS

General Comments: Soybeans and products closed a little lower with many traders uncertain of the next price direction for these markets. Soybeans and the products fearless demand from China due to recent saber-rattling from the US about how China handled the Coronavirus outbreak and more recently due to Chinese moves to impose its will on Hong Kong. Chinese moves to better control Hong Kong are not going well with western nations who want Hong Kong to hold onto its more independent status. The demand has been slow otherwise with the significant competition from Brazil. The Real has weakened a lot against the US Dollar and Brazil producers can sell at very high prices in the local currency. Weather is improving with warmer temperatures. Some Soybeans might need to be replanted this week. Brazil's production is almost sold out now. Production estimates there are slightly less than before due to hot and dry weather in some areas.

Overnight News: China bought 264,000 tons of US Soybeans and unknown destinations bought 216,000 tons of US Soybean Meal.

Chart Analysis: Trends in Soybeans are mixed to down with objectives of 808 and 789 July. Support is at 818, 812, and 806 July, and resistance is at 839, 850, and 861 July. Trends in Soybean Meal are down with objectives of 279.00 July. Support is at 280.00, 277.00, and 274.00 July, and resistance is at 286.00, 288.00, and 290.00 July. Trends in Soybean Oil are mixed. Support is at 2630, 2620, and 2560 July, with resistance at 2690, 2760, and 2810 July.

CANOLA AND PALM OIL

General Comments: World vegetable oils markets were mixed last week. Palm Oil closed higher after news of renewed demand interest from India and China. It as closed today. 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. Soybean Oil was higher last week and Canola was lower. Palm Oil and Soybean Oil were hurt by the lack of biofuels demand, but the demand loss appears to be part of the market price now. The same factors affecting ethanol demand are affecting demand for other biofuels. People are driving less due to the Coronavirus and even reduced Crude Oil production has not been enough to lift prices to profitable levels for biofuels producers. Canola fell on 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 biofuels uses. China has recently allowed Canadian Canola imports to resume, so demand could soon improve. The weather has been warmer this past week after weeks of cold and wet weather.

Chart Analysis: Trends in Canola are down with no objectives. Support is at 462.00, 459.00, and 455.00 July, with resistance at 468.00, 470.00, and 472.00 July. Trends in Palm Oil are mixed to up with objectives of 2340 August. Support is at 2130, 2100, and 2010 August, with resistance at 2210, 2260, and 2290 August.