Headlines:

  • Bears hold fire on ags, although wheat struggles
    Ag markets came nowhere near the record-breaking performance of shares, which pushed the Dow Jones Industrial Average above 22,000 for the first time, helped by a boost to sentiment from well-received Apple results. But gains were the order of the day, if not obligatory, in both grain and soft commodities markets, with arabica coffee notably firm, adding 1.8% to 140.35 cents a pound for September delivery, a fresh three-month high for the contract. The December lot added 1.8% to 144.05 cents a pound. The gains were attributed by, besides lingering concerns over the quality of Brazil’s harvest following reports of insect outbreaks, technical factors. “The indicators favor the upside,” said Sucden Financial earlier in the session. “Yesterday’s spike below 140 cents a pound [December basis] and quick recovery suggests appetite for higher prices. “However, resistance around 143 is strong,” if not as strong as might have been expected to judge by the higher close.
  • Brazil a ‘bigger threat’ to US in corn exports, rather than soy – ADM
    Brazil represents a bigger threat to the US in corn rather than soybeans in export markets, for now, the head of Archer Daniels Midland said – while forecasting a boost in oilseeds from wheat dynamics too. Juan Luciano, the ADM chief executive, flagged the threat to US crop trading “because we’re going to get all these potential exports from South America” during the July-to-September quarter, following strong corn and soybean harvests in the likes of Argentina and Brazil. Brazil’s 2016-17 corn production, including the ongoing safrinha harvest, will end up 45% above last year’s drought-affected levels, at 97.0m tonnes, with soybean output up 18.1% at a record 114.0m tonnes, on US Department of Agriculture estimates. It is the country’s bumper corn harvest which looks like providing particular competition to US trade, thanks in part to continued knock-on effects of Brazilian growers’ reluctance to sell soybeans in particular at prices dented by strengthening the real as well as by softer international values. Brazilian soybean prices, at R$69.98 per 60-kilogram bag, are down 15.5% over the past year, according to data from research institute Cepea, compared with a 2.0% decline in dollar-denominated Chicago futures.

Summary:

Analysts have started suggesting that selloff in Beans may be a bit overdone and some of the news wires are suggesting that is the reason for the small gains today. Our data showed that Beans, Corn and Wheat were all very close to potential support levels so the support in those markets today is not a complete surprise. It also has been flying under the radar that the US Dollar continues to suffer losses on a daily basis. If the Dollar continues to decline at its current pace it could lead to eventual price stabilization for the Commodity complex. The 6 to 10-day weather forecast continues to show below average temperatures across the majority of the United States with far below average temperatures in the southern plains. The southern plains and eastern Corn Belt show a moderate probability of receiving precipitation.

After testing 50.50 yesterday then selling off, Crude Oil returned to positive territory. The 50.50 level is important to this the September contract according to our metrics. Above 50.50 this contract stands to make a run up to 52.30 or even 54.30 prior to coming off the board.