Sales for future shipment have been on the decline as a sizable secondary corn crop gets bigger in Brazil amid a sizable corn and bean crop grown in Argentina this past growing season. The market is witnessing increased competition for meaningful corn exports from the Southern Hemisphere which is so similar now to the export competition that has previously happened with beans in prior growing seasons. Export Sales were paltry this week again for old crop/new crop beans and corn. Throw in new potential tariffs with China, and its weak for demand. That has been the story for this week despite a short covering dead cat bounce today that had corn up 7 cents and beans up three. Remember we are in a supply side market during US growing season but without a weather hiccup, the market glances at the demand side of the equation to increase buying or selling or in corns case, liquidate. Wheat is its own animal and funds once again bought Chicago wheat (ZWU up 15 cents, KEU up 6, Mpls up 3.4 today) at the expense of Kansas City and Minneapolis wheat. As one of our colleagues here at Walsh likes to say, there’s gremlins in this inter-market spread where the lower protein wheat has been the contract that’s been sought after.
Weather and the the next two monthly government reports or WASDE (supply/demand) and this months planted acres will set the tone until harvest. A crop planted this late especially for beans can bring problems later in August into early September which may mean fireworks in the soy complex come the September WASDE. However there is much to consider prior to that and first and foremost we need to understand what’s been planted for both crops. If the USDA only cuts corn acres by a few million acres or simply leaves them alone like last time at 91.7 million acres, I posit then any bearish corn acreage number, would be friendly beans as their acres would be cut vs market expectations. Should on the other hand they aggressively cut corn acres by 8 to 10 million, then I would deem the bean number potentially bearish. Following the acres release, the psychology will be that it’s not what you plant but what you grow and the weather market fundamentals will dominate amid field estimates on yield and production from private forecasters. Below is a chart for November beans. We need to hold the 866-63 area (designated by blue arrow). Should it not hold we could push to 840-837. A hard close under that level and its katy bar the door down 811.4-810. We need a close over 883 and then 902 to turn higher here and it can happen in a New York minute most likely on weather events that deteriorate crop condition. In this type market place where Tweets, Fbook posts, overnight and weekend commentary unforeseen and seemingly out of nowhere that affects price movement, my advice would simply let the charts guide your decision making. Leave your opinions at the door and simplify it as best as possible. Please join me for a free and livestock webinar at 3pm Central time every Thursday at 3pm Central. Signup is free and a recording link will be sent to your email. Sign Up Now We discuss supply, demand, weather, and the charts. Call or email me with questions. 888 391 7894 or [email protected]
