Morning Comments/Roy's (RJ O'Brien)
USDA Crop Production & Supply/Demand report Today at 11:00 am CST CORN: Corn is higher this morning with USDA updating their S/D at 11 a.m. CST. Trade looking for USDA to cut ending stocks of old crop US corn by 100 mln bu though many private analysts using carry outs 200-300 mln bu smaller than current. Farmer selling did pick up in the US in the ECB yesterday as prices hit $6.00 cash but selling was limited in the WCB. Need another 20-25 cents to hit $6 in the WCB at various spots. Interior basis levels firmer though with ethanol margins still in the green (though contracting as corn rally outpaces ethanol strength in recent days). Open interest in May corn fell almost 20k contracts with the Goldman roll underway (July open interest was up 25k contracts) and today being day 2 of the row. May corn has resistance at $5.85 and then $6.00. Support is expected on breaks toward $5.65-5.60. WHEAT: Wheat is higher this morning before the USDA report but has seen a 3 day rally of 29 cents/bu in KC July. The wheat market is due for a corrective breather. European wheat futures are firmer though French wheat are holding steady at 87% G/E vs 62% a year ago. Trade continues to keep eye on dryness in US northern Plains and Canadian prairies. Sovecon estimates the coming 2021 Russian wheat crop will be near 80.7 mmt (USDA at 85.3 mmt). This would be up from last year's 73.6 mmt crop. Export news is quiet this morning with end users taking pause after recent rally. Heavy resistance is expected in KWN at $6.00 July. SOY-COMPLEX: Soybeans are steady to mixed. Meal is higher while soy oil is slightly lower as meal corrects vs oil. Malaysian palm gave up early gains overnight to close lower but still finished higher for the week. Traders look for the USDA to keep old crop US carryout near the 120 mln bu level, which is pipeline minimum, while adjusting the S. American crop. Traders expected to see the Argentine soybean crop trimmed slightly while Brazilian production should remain steady at 134 mmt. US soybean basis continues to move higher along with meal value stabilizing. Strap in for today's report.