MarketEdge AM Comments

Jul 12, 2023

(Phil Knuth)

Good Morning.  It is Report Day.  At 11am, USDA will release the July WASDE Report.  Corn and soybean futures were higher overnight.  September corn finished the overnight session up 2 cents, settling at 4.9650.  August soybeans were up 13 ¾ cents, settling at 14.8525.  In the outside markets, as of 7:40am:  The US Dollar Index is off 266 points, trading at 101.466.  August crude oil is up 36 cents, trading at $75.19 per barrel.  Precious metals are all higher.  Industrial metals are all higher.  The Electronic Mini-DJIA is up 36 points, trading at 34,500.  In anticipation of this morning’s report, soybean futures have had a solid start to the week.  The nearby August contract has rallied over 50 cents since Friday’s close.  This is because today’s monthly update to the supply and demand tables will include the new acreage figures released on the June 30th report.  At the end of last month, USDA lowered the projected planted soybean acreage figure by a staggering four million acres.  Plugging this figure into the balance sheet, without changing any of the usage categories, creates an incredibly tight ending stocks scenario for the 2023/24 marketing year.  It will be interesting to see how USDA tweaks demand in order to make up for this seismic shift in planted acreage.  Will there be a “buy the rumor, sell the fact” reaction?  One can only sit anxiously until the report is released at 11am and see how traders decide to react.  Another category on the production side of the balance sheet that is expected to change today is the projected corn yield figure.  Due to the dry start to this growing season, the average trade estimate for the national corn yield projection is five bushels per acre lower than the yield figure used on the June report.  Again, as with any major USDA report, trying to outguess the government is a fruitless endeavor.  We will all find out together what the almighty USDA has to say at 11am and the trade will react accordingly.  Fasten your seatbelts as today could get rather interesting!  Yesterday, the funds bought 2000 contracts of corn, bought 5000 contracts of soybeans, and bought 6000 contracts of wheat.  They are now estimated to be net short 360 contracts of corn, net long 92,190 contracts of soybeans, and net short 46,400 contracts of wheat.  From a chart perspective, September corn faces initial resistance at the psychological 5.00 level, followed closely by 5.0225, Friday’s high.  Initial support lies at 4.87, yesterday’s low, followed by 4.79, the 21-month low charted one week ago.  August soybeans face initial resistance at 14.8950, the overnight high, followed by the psychological 15.00 mark, and then the four-month high charted last Monday, 15.0475.  Initial support lies at 14.70, the overnight low, followed by 14.50, and then Friday’s low, 14.25.  Opening calls are higher.
Have a great Wednesday.

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