Soybeans–
Soybean planting is at 96% complete, 1% lower than the 5-year average. The current good/excellent rating is 66%. The COT report was delayed until Monday, due to the holiday last week. Managed money has been active in the soybean complex. The COT report for the week ending June 17th showed the funds added to their soybean net long position to a total of nearly 60k contracts, which is a 19-month high. The funds also added to their bean oil position bringing them to a net long of 46k contracts, which is a 3-week high. Soybean meal net shorts reached 107k, making a 1-month high. The weather forecast for July shows hot and dry weather for the Midwest.
The period from late June through early October has been a dangerous stretch over the last 15 years. Over this timeframe soybeans saw losses in 11 out of 14 years, with an average return of -4.87%. It’s one of the weakest seasonal windows in the entire commodity complexes.
Brazil’s soybean exports for June are expected to be 14.99 mmt, up from the prior estimate at 14.36 mmt.
Looking at technicals, support is at 10.33, 10.50, resistance is at 10.60 in November soybeans.
July Soybeans (ZSN25) settled at 1046 (-12), high of 1062, low of 1046. New crop November Soybeans (ZSX25) settled at 1037 (-9). Cash price is at 1033 (-12)
July Bean Meal (ZMN25) settled at 280.5 (-1.9) high of 284.3, low of 280.1
July Bean Oil (ZLN25) settled at 52.17 (-1.07) high of 52.93, low of 51.77
The July Meal to Oil ratio (51.76% Meal – 48.24% Oil)
ZSN25 Moving Averages – (1064) 5-day, (1055) 20-day, (1054) 50-day, (1049) 100-day, (1047) 200-day
ZSX25 Moving Averages – (1056) 5-day, (1040) 20-day, (1036) 50-day, (1033) 100-day, (1033) 200-day
ZMN25 Moving Averages – (283.4 5-day, (291.7) 20-day, (294.9) 50-day, (301.5) 100-day, (309.8) 200-day
ZLN25 Moving Averages – (53.89) 5-day, (49.69) 20-day, (49.31) 50-day, (47.27) 100-day, (45.40) 200-day
The Commitments of Traders report for the week ending June 17th showed soybeans Managed Money traders bought 33,526 contracts to their bringing their net long total to 59,165 contracts. Producer/Merchants sold -17,367 contracts bringing their net short position to -160,854 contracts. Non-Commercial & Non-Reportable traders net position was 43,994 contracts.
The Commitments of Traders report for the week ending June 17th showed meal Managed Money traders sold -20,273 contracts, moving to a net short position of -107,081 contracts. Producer/Merchants bought 19,470 contracts bringing their net short position to -42,635. Meal Non-Commercial & Non-Reportable traders hold a short position of – 78,428 contracts.
For bean oil, the Commitments of Traders report for the week ending June 17h showed Managed Money traders were net long 46,143 contracts after buying 21,375 contracts. Non-Commercial & Non-Reportable traders net long position was 70,535 contracts.
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CORN –
July Corn (ZCN25) settled at 416 (-3), high of 422, low of 415. New crop December Corn (ZCZ25) settled at 429 (-4). Cash price is 442 (-9)
Corn ratings fell 2% to 70% good/excellent. Falling crude oil prices and rains have put pressure on the price of corn. The Grain Stocks report and Acreage report will be released next Monday. It is possible to see a reduction in acreage due to wet weather in parts of the eastern corn belt and the south. Even if we do see a slight increase in corn acreage from the USDA, it is possible that corn puts in a bottom. The market may be pricing in an acreage increase of a couple million bushels due to how depressed price has been over the last several months. If we do see a rally it will come from the report next Monday because there is a lack of weather story at this time. Growing conditions for most of the corn belt have been very solid. With that being said, managed money does hold a large and growing short position in this market so that’s something to be aware of.
ZCN25 Moving Averages – (425) 5-day, (437) 20-day, (455) 50-day, (469) 100-day, (462) 200-day
ZCZ25 Moving Averages – (437) 5-day, (440) 20-day, (446) 50-day, (452) 100-day, (448) 200-day
The Commitments of Traders report for the week ending June 17th showed that corn Managed Money sold -20,768 contracts bringing their net position to -184,788 contracts. Producer/Merchants bought 15,051 contracts bringing their net position to -63,293 Non-Commercial & Non-Reportable traders net short position was -187,071 contracts.
WHEAT –
July Chicago Wheat (ZWN25) settled at 535 (-17), with a high of 553, low of 535. September Wheat (ZWU25) settled at 552 (-17). Chicago Wheat has a cash price of 550 (-19). July KC Wheat (KEN25) settled at 534 (-15). July Spring Wheat (MWN25) settled at 625 (-1)
On the latest COT report, the funds did cover some of their short positions, reaching a 3-month low. However, they still hold a large short position. Wheat has fell in price along with crude oil lately. Winter wheat harvest is now 19% complete, significantly below the 5-year average at 38%. Crop disease has been an issue, slowing down harvest. Winter wheat conditions fell 3% to 49% good/excellent. Last year at this time winter wheat ratings were 52% good/excellent. Meanwhile, hard red spring wheat conditions fell to 54%, a reduction of 3% on the good/excellent rating. Last year at this time HRS conditions were 71% good/excellent.
Looking abroad, Ukraine’s wheat harvest projection was lowered by 3% to 21.74 mt. Russia’s wheat crop is forecasted at 84.4 mmt according to Argus. This is an increase of 4.5 mmt from the last estimate. This comes after Russia issued a crop emergency due to dryness in the Rostov region just 2 weeks ago.
ZWN25 Moving Averages – (556=5) 5-day, (542) 20-day, (540) 50-day, (559) 100-day, (575) 200-day
ZWU25 Moving Averages – (572) 5-day, (557) 20-day, (555) 50-day, (574) 100-day, (588) 200-day
KEN25 Moving Averages – (553) 5-day, (539) 20-day, (539) 50-day, (569) 100-day, (580) 200-day
MWN25 Moving Averages – (633) 5-day, (623) 20-day, (610) 50-day, (617) 100-day, (625) 200-day
The Commitments of Traders report for the week ending June 17th showed that Managed Money traders in the wheat market were net short -81,353 contracts, having decreased their short position by 12,658 contracts. Producer/Merchants sold -7,525 contracts to bring their net long position to 26,570 contracts. Non-Commercial & Non-Reportable traders were net short -89,832 contracts.
Hans Schmit
Account Executive Walsh Trading
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hschmit@walshtrading.com
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