Morning Comments; Friday, July 12th, 2019

Trade was weaker overnight as the buying enthusiasm following the monthly supply and demand report faded. Wheat was the well-defined leader yesterday, taking support from the reduction to the global crop. The greatest cut was to the Russian crop of 3.8 million metric tons. This will still leave Russia with its 2nd largest crop in history though, which is tempering today’s strength. We are also seeing concerns over wheat production in Australia from hot, dry forecasts. That said, global wheat supplies are still ample enough to satisfy demand. Corn and soybean numbers were mostly as expected yesterday, even though for soybean production, the crop is smaller. Ending stocks of 795 million bu on soybeans is not considered to be bullish, however. We will not see interest shift to demand, and that is where most of the market concerns are coming from. This is especially the case on exports, which have been light in recent weeks. Trade will also return to focusing on weather today, mainly the heat and dry conditions for parts of the Corn Belt. Trade will also focus on the tropical storm that will hit the Delta over the weekend. Outside markets and technical indicators will also be market influencers.

Highlights

* Global commodity supplies remain ample

* Ethanol plants starting to shut down

* President Trump tweets displeasure with Chinese trade

* USMCA vote expected in September

* Major investors pulling monies out of agriculture

* Acreage reductions expected in August balance sheets

* Trade showing more concern on demand

Corn

* Carryout up 335 million bu at 2.01 billion bu

* US harvested acres up 1.4 million from June

* Export sales disappointing

* Dec corn trades right to 200 day moving average at $4.48 ½

* China lowers corn consumption forecast

Soybeans

* 250 million bu reduction to ending stocks

* Harvested acres down 4.5 million

* China buys soybeans last week

* Unknown buyer cancels soybean bookings

Wheat

* US carryout reduced 72 million bu, holds at 1 billion bu

* Concern now is on global production

* US yields/quality average as harvest progresses

* Wheat crop is poorer in ECB

* Spring wheat looks very good

Livestock

* Cattle suffer from lack of cash movement

* US pork exports down 52% last week from week before

* No pork sales made to China last week

* US beef export sales up 15% on the week

* Higher feed grain values weigh on feeders




 

Market Commentary provided by:

Karl Setzer Grain Commentary