July 1, 2016

Wake Up Call

Traders Prepare for Three Day Weekend

Good Morning! Paul Georgy with the early morning commentary for July 1, 2016.

Grain markets are lower on new month, new quarter, and pre-holiday positioning.

More Market Commentary:

Morning Coffee Commentary 7-1-16

NOAA updated their July forecast yesterday afternoon. They see above average temperatures across the country, and normal precipitation across the corn belt. Trade will watch weather maps closely over the holiday weekend.

USDA Quarterly Stocks, out yesterday, pegged corn stocks at 4.722 billion bushels. The average trade estimate was for 4.528. Soybean stocks were reported at .870, vs the average estimate of .829. Wheat stocks were .981 vs the average trade estimate of .982.

USDA's Planted Acreage report had corn at 94.148 million acres, soybeans at 83.688, and all wheat at 50.816. The average estimates were for 92.896, 83.834, and 49.869 receptively.

The biggest surprise to traders was the corn acreage number, followed by the implied low corn feed usage based on the grain stocks numbers.

Weekly export sales were also released yesterday morning. Corn sales totaled 1,004,550 metric tonnes (468,473 old crop + 536,077 new), within the 1,000,000 - 1,450,000 trade estimate. The old crop sale of 468,473 is the lowest since February 4.

Soybean export sales were strong at 1,528,005 metric tonnes (730,005 old + 798,000 new). This was within the 1,100,000 - 1,600,000 expectation. Soybean sales have been strong in 13 of the past 16 weeks. During this time they have been 171% over the five year average.

Wheat export sales came out at 645,335 metric tonnes (all old crop). That was over the 300,000 - 600,000 trade expectation.

Corn deliveries in the July contract totaled 164 overnight. This brings the two day total to 340 deliveries. Additional soybean and wheat deliveries were seen as well.

Margins on soybean futures will increase again effective with today's close. The initial margin will be $3,190 per contract and the maintenance margin will be $2,900 (for hedgers the initial and maintenance are both $2,900).

Brazil's Agriculture Ministry announced they would suspend the planned auction of 500,000 tonnes of government owned corn stocks based on the fact that domestic prices had fallen 25% recently and there was a lessened need for it.

Russian president Vladimir Putin, signed a decree authorizing the ban on food imports from several EU and other countries to extend beyond the original August 6 stopping point. Imports will now be banned all the way out to December 31 of 2017.

Funds were estimated to have been net sellers of 20,000 corn contracts in yesterday's trade. They were estimated buyers of 19,000 soybeans, 2,500 wheat, 8,000 soymeal, and 4,000 soyoil contracts.

China's Purchasing Managers' Index (PMI), seen as an indicator of the health of large and state-owned companies, came in at 50.0 last month, the lowest level since February.

ISM Index and Construction Spending reports are out today at 9:00 AM CT. Auto Sales will be out at 1:00 PM.

Cash cattle traded from $122 to $124 yesterday. Last week's cash trades were at $116.

Lean hog futures closed above the 50 day moving average yesterday, after testing the 62% retracement level.

Dressed beef values were lower with choice down .13 and select down .87. Pork cutout values were down .51.

Have a safe and happy 4th of July! Markets will close at their normal times today, and will not reopen until Tuesday morning.

Markets At-A-Glance – 4:45 AM

  • Dec Corn    - 1/2
  • Nov Beans   -5
  • Sep Wheat   -5
  • Dec Soymeal - 2.10
  • Dec Soy oil +.33
  • Sep Dlr     -.16
  • Sep S&P     -7.20
  • Aug Crude   -.28
  • Aug Gold    +15.80

Technical Chart of the Day

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