Grains Report - Monday, June 15
WHEAT
General Comments: Wheat markets were lower for the week after USDA raised US production prospects and raised world ending stocks levels. The moves by USDSA pointed to tough competition down the road for US export sales. The Winter Wheat markets hold to bearish trends on the weekly charts and this is especially true for the HRW market. Spring Wheat markets show down trends as the US and Canadian crops are getting planted and are reported to be in mostly good condition. The harvest has started in the central and southern Great Plains with variable yields reported because of freeze damage and then stress from hot and dry weather, but the yields from USDA were a little higher than expected and ay cuts to HRW production were offset by better SRW and White Wheat production. It remains dry in the western sections of the Great Plains but this will aid harvest progress now. Better rains are reported in Europe and Russia. Russia could turn hot and dry starting this week but soil moisture is good for now. Australia remains in good condition. The harvest is coming and prices usually start to move lower soon and remain down through the harvest.
Overnight News: The southern Great Plains should get dry conditions. Temperatures should be above normal. Northern areas should see scattered showers. Temperatures will average above normal. The Canadian Prairies should see mostly dry conditions. Temperatures should average above normal.
Chart Analysis: Trends in Chicago are mixed to down with objectives of 496, 492, and 489 July. Support is at 496, 494, and 487 July, with resistance at 509, 513, and 515 July. Trends in Kansas City are mixed to down with objectives of 436, 433, and 410 July. Support is at 445, 439, and 431 July, with resistance at 456, 460, and 466 July. Trends in Minneapolis are mixed to down with objectives of 505, 492, and 487 July. Support is at 502, 492, and 491 July, and resistance is at 519, 525, and 528 July.
RICE
General Comments: Rice was a little higher in new crop months and much lower in old crop July. July started to collapse a week ago as the funds initially bought the market and then were forced to sell. The selling continued for most of the week last week, but July managed to close limit up on Friday. New crop months were relatively little changed as new crop prospects appear solid for increased production in the coming year. The funds were initially buying the old crop futures on ideas of supply tightness and started to buy again on Friday for the same reason. 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. The crops that got planted 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. Ideas are that the long grain will get planted and producers will not plant medium grain if some prevent planting is needed.
Overnight News: The Delta should get mostly dry conditions. Temperatures should be generally above normal.
Chart Analysis: Trends are mixed. Support is at 1535, 1525, and 1460 July, with resistance at 1665, 1731, and 1810 July.
CORN AND OATS
General Comments: Corn was a little lower on the weekly charts as the current seasonal rally appeared to stall. USDA made no big changes in its ending stocks estimates as it cut production due to losses last year in the Dakotas but also cut demand due to less ethanol production. Many in the trade expect further cuts to ethanol demand in coming reports. 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. Ethanol demand is also improving as lockdown orders are lifter in most states and in Europe. Demand for gasoline and ethanol has gotten a little stronger and should continue to improve over time. The US weather and growing conditions are becoming more important as Corn enters its greatest demand time for moisture. It will be hot and dry this week in the Great Plains and Midwest, but forecasts call for more rains after that. This implies that generally, good growing conditions should continue. Continued hot and dry weather would imply yield loss potential and be a reason to see prices move sharply higher as funds and speculators, in general, are short the market. Oats gave up their rally last week and chart trends are turning down in a big way. Demand should start to back off now that many are leaving the house and are working again.
Overnight News:
Chart Analysis: Trends in Corn are mixed to up with objectives of 346 July. Support is at 328, 324, and 321 July, and resistance is at 335, 340, and 344 July. Trends in Oats are mixed. Support is at 312, 310, and 307 July, and resistance is at 323, 331, and 335 July.
SOYBEANS AND PRODUCTS
General Comments: Soybeans were higher improved Chinese demand. China is thought to have bought more than 1.0 million tons of US Soybeans in the past week, defying the talk that it would avoid US Soybeans due to the war of words between the two countries on Hong Kong and general human rights issues. The Chinese moves to clamp down on Hong Kong dissent was going to be a big negative for bilateral relations as the political situation between the US and China has deteriorated. China is looking to curb the dissent in Hong Kong over moves to bring the city more under central government control from Beijing. It is also moving against Muslims in western parts of the country. The world has objected and the US has now imposed some additional sanctions on the country. The sanctions were designed to keep trade flowing between the countries so the Chinese kept buying. 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. The US weather is considered good for growing Soybeans at this time, but traders are watching for potentially hot and dry weather for an extended period that could cut yield potential. Forecasts call for a hot and dry week this week, but rains are expected after that.
Overnight News: China bought 390,000 tons of US Soybeans over the weekend here.
Chart Analysis: Trends in Soybeans are mixed to up with objectives of 879, 883, and 889 July. Support is at 863, 861, and 857 July, and resistance is at 873, 877, and 881 July. Trends in Soybean Meal are mixed to up with objectives of 292.00 and 298.00 July. Support is at 286.00, 282.00, and 280.00 July, and resistance is at 292.00, 294.00, and 296.00 July. Trends in Soybean Oil are mixed to down with objectives of 2700 July. Support is at 2720, 2690, and 2660 July, with resistance at 2800, 2840, and 2860 July.
CANOLA AND PALM OIL
General Comments: World vegetable oils markets were mixed last week. Palm Oil closed lower on lower world equity markets and despite news of renewed demand interest from India and China and on reports of less production from Malaysia. SGS and AmSpec reported improved exports in its data last week. Palm Oil has been hoping for better demand from importers as world economies slowly open after being closed by the Coronavirus epidemic. Indonesia continues to focus its Palm Oil on internal demand for bio fuels. Soybean Oil was lower last week and Canola was higher. Canola fell initially on improved growing conditions in the Canadian Prairies. Canola has found support from the weaker Canadian Dollar. Canola is more of a food oil than the others, although it also has bio fuels uses. 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 mixed. Support is at 463.00, 461.00, and 459.00 July, with resistance at 472.00, 474.00, and 478.00 July. Trends in Palm Oil are mixed. Support is at 2320, 2300, and 2280 August, with resistance at 2400, 2420, and 2510 August.
Disclaimer: Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also ...
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