Daily grains outlook: Soybeans, corn & wheat

Corn (December)

Yesterday’s Close (Monday, June 11):  December corn futures finished yesterday’s session down 9 ¾ cents, trading in a range of 11 ½ cents.  Funds were estimated sellers of 34,000 corn contracts for the day.

Fundamentals:  Good weather and a weak chart had the funds in long liquidation mode to start the week as they look to square things up ahead of today’s USDA report (released at 11am cst).  The average estimate for 2017/2018 carryout is 2.163 billion bushels.  The average estimate for 2018/2019 carryout is 1.642 billion bushels.  The average estimate for Brazilian corn production is 83.8 million tonnes.  The average estimate for corn production in Argentina is 32.4 million tonnes.  Yesterday afternoon’s weekly crop progress report had corn rated 77% good/excellent, this was down 1% from last week.  CONAB estimated Brazil's production at 85 million tonnes, down from 89.5 last month.

Technicals: The chart has resembled that of a technical graveyard over the past two weeks, trading as much as 41 ¾ cents off of the highs.  Yesterday’s weakness pulled the RSI (relative strength index) into oversold conditions for the first time since last November.  The market is firm in the overnight session, but traders will be looking for more volume on the floor open to confirm price. The bears are in clear control and rallies will be looked at as relief rallies until the bulls can achieve consecutive closes back above technical resistance. 

Soybeans (November)

Yesterday’s Close:  November soybean futures finished the day down 16 ½ cents, trading in a range of 19 ¾ cents.  Funds were estimated sellers of 15,000 contracts for the day.

Fundamentals:  As with corn, soybeans fell victim to better weather over the weekend which prompted additional long liquidation from the funds to start the week.  Funds are likely near neutral now which is not typical this time of year when the crop is far from made.  Yesterday afternoon’s crop progress report had soybeans rated 74% good/excellent, this was slightly below most expectations.  All eyes will be on this morning’s USDA report which will be released at 11 am cst.  The average estimate for 2017/2018 carryout is .523 billion bushels.  The average estimate for 2018/2019 carryout is .435 billion bushels.  The average estimate for Brazilian soybean production is 117.4 million tonnes.  The average estimate for soybean production in Argentina is 37.6 million tonnes.  CONAB estimates Brazilian production at 118.05 million tonnes, up from 117 last month. 

Technicals:  The market has been in free fall for the better part of the last two weeks, taking as much as 87 ½ cents off of the recent highs.  As you would guess, that has pulled the RSI (relative strength index) into “oversold” territory, something we have not seen since April of last year.

Wheat (July)

Yesterday’s Close:  July wheat futures finished yesterday’s session down 8 ½ cents, trading in a range of 16 ½ cents.  Funds were estimated sellers of 4,500 contracts for the day.

Fundamentals:  Wheat futures have managed to hold their own relative to the weakness in corn and beans over the past two weeks.  Hot and dry weather in the Black Sea region and Australia have been the catalyst to keep prices afloat for now.  Yesterday’s crop progress report had spring wheat rated as 70% good/excellent.  Winter wheat ratings were up 1% to 38% good/excellent with 14% of the crop now harvested.  Analysts are expecting today’s USDA report to have all wheat production at 1.813 billion bushels.  The average estimate for 2017/2018 carryout is 1.078.  The average estimate for 2018/2019 carryout is .958. 

Technicals:  Higher lows and higher highs have been the trend for the past two months, but the market is now just treading water near the middle of the 13-month range (523) as market participants wait for new news to give us a firmer direction.  For this reason, we are keeping our bias as neutral for the time being.