DTN Grain Close: Mild USDA Report, Big Response in Wheat

USDA’s new supply and demand estimates were mostly small adjustments to May’s numbers, but July Chicago wheat jumped up 20 cents Tuesday, partly encouraged by a 3.5 mmt reduction in Russia’s wheat crop estimate. July corn ended up 10 1/4 cents while soybeans were up just a quarter-cent.

 

Midday: Corn and wheat lead ahead of the WASDE report with trade up 1 to 5 cents, with soybeans flat.

CORN

Corn trade is 3 to 5 cents higher at midday with trade looking to at some light profit taking buying ahead of the report after the recent selling. Forecasts remain in flux with heat and rain featuring for most with heat looking to intensify into the weekend.

The second crop areas of Brazil are getting closer to the end of the growing season with continued nearby dry weather with production estimates edging lower again with harvest set to expand with estimates falling to 85 million metric tons, down 4 from last month from CONAB. Ethanol margins have gotten a bump with the energy complex turning back higher. Mexico bought 152,000 metric tons of corn, mostly old crop.

Basis has been flat to firmer in recent days with the lower board. The weekly crop condition reports showed 77% good to excellent, down 1 percentage point on the week and 4% poor to very poor, with 94% emerged vs. 92% on average.

On the WASDE report, trade is looking for 2.166 billion bushels of old crop carryout, and 1.66 billion bushels of new crop, World stocks are expected to be 193.39 million metric tons of old crop, and 157.56 of new crop

. On the July chart we remain below the 200-day, at $3.82 which is now nearby resistance and then the 100-day at $3.87. Nearby support is the $3.66 3/4 fresh four-month low scored Monday.

SOYBEANS

Soybean trade is narrowly mixed with trade unable to sustain the early overnight gains. Meal is $2 to $3 higher and oil is 30 to 40 lower. Crush margins have narrowed but remain positive with the weaker beans, with meal drifting back to the $350 level. Bean basis has remained steady, with trade likely to remain quiet in the near term as old crop exports remain slow.

Brazil continues to move bushels as they move post-harvest with CONAB estimates up 1 million metric tons from last month. Weekly crop progress was 74% good to excellent, and 4% poor to very poor down 1% with 93% planted vs. 85% on average and 83% emerged vs. 69% on average.

On the WASDE report, trade is looking for domestic old crop carryout at 522 million bushels of old crop, and 417 million of new, with world stocks at 91.35 million metric tons of new, and 86.74 of new.

On the July chart, trade is back below all the major moving averages with the 20-day at 10.09 the first level of resistance with support at the new low of $9.52.

WHEAT

Wheat trade is 2 to 6 cents higher with trade finding light buying ahead of the report as harvest progress. Warmer weather should allow early harvest to progress quickly with the lagging maturity catching up with the continued warm weather which tends to limit yields but early protein numbers remain average to strong.

Harvest pressure should build further this week. Spring wheat should see better progress with warmer weather helping to catch up emergence along with more rain.

Australia should see some improvement but overall remains mixed. The Black Sea remains on the dry side near term, with Russian spring wheat weather remaining mixed with improvement in Ukraine. HRW basis has improved ahead of the anticipated harvest protein improvement.

Weekly crop progress has winter wheat unchanged at 38% good to excellent, and 35% poor to very poor, with 91% headed, 1 percentage point ahead of average, and harvest 14% complete, 4 percentage points ahead of average. Spring wheat was 70% good to excellent, 4% poor to very poor, unchanged on the week with 94% emerged, 5 percentage points ahead of average.

On the report, domestic carryout is expected to be 1.079 billion bushels of old crop, and 958 million of new. World stocks are expected to be 270 million metric tons of old, and 263 million of new.

On the July Kansas City we are just below the 10-day and highest major moving average at $5.39 before breaking again overnight; next resistance is the upper Bollinger Band at $5.65. Support is the $5.35 20-day moving average which we are just above.

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