Corn Market Update

? Prices:

• July Corn (CN): $4.10 1/4, down 6 cents; new contract low at 4.08
• December Corn (CZ): $4.22 1/2, down 6 1/2 cents; new contract low at 4.21
• July/September Spread (CN/CU): 5 1/4, up 1 1/4 cents

? Market Headlines:

• This morning's weekly ethanol report from the EIA showed daily production in the week ending June 20th down 2.5% from last week at 1.081 mil bbls/day; the figure though was up 2.3% from the same week last year. Ethanol stocks in the week were seen at 24.404 mil bbls, which was up 1.2% from last week and up 3.3% from the same week last year.

• Corn usage in the week was estimated at 106.8 mil bu, which brings cumulative marketing year corn use to 4.443 bil bu; this compares to 4.317 bil bu through the same week last year, and the USDA's full marketing year forecast of 5.500 bil bu.

• Staying on the biofuel front, Brazil's National Energy Policy Council today announced that the percentage of fuel ethanol blended into gasoline would be increased from 27% to 30% this summer, in a move that will boost domestic demand.

Summary:

New day, same story on Wednesday in the corn market, as both old and new crop values made new contract lows again on a disappointing ethanol report and continued overall broader bearishness across the ag space in general. Brazil's massive crop continued to weigh on values again today, but it will be Monday's acreage and stocks data that will key price direction into pollination, which likely begins across the bulk of the Corn Belt in another three-ish weeks or so. Otherwise, fund positioning looks to be the main theme the rest of the week this week, with at least some sort of profit taking expected between now and the weekend.

Soybean Market Update

? Prices:

• July Soybeans (SN): $10.25 1/4, down 21 1/2 cents
• November Soybeans (SX): $10.18 1/2, down 18 1/2 cents
• July/August Spread (SN/SQ): -4 1/4, down 3/4 cent

? Market Headlines:

• Along with the ethanol announcement, Brazil's National Energy Policy Council also announced that approval had been given to increase the amount of biodiesel in diesel blends to 15% from 14%. The group had previously this year decided against the increase due to push back from industry groups regarding increasing food prices and the lowering of government approval ratings.

• Meal values made new contract lows again today for now the fourth consecutive session, as sellers continue to remain active here based on record large US production.

Summary:

Like we mentioned above, the soy complex took over downside leadership in the ag space on Wednesday, but there wasn't really any specific reason as to why throughout the day. We've talked about it somewhat ad nauseum the past few weeks, but the bottom line remains that ending stocks get pretty bearish pretty quickly without some sort of China agreement when the new crop export window opens back up this fall. Non-China business should funnel to the US at some point on a price basis, but as we've found out in the years since Trump's first trade war, it is simply impossible to replace China's buying capacity.

? Prices:

• July Chicago Wheat (WN): $5.28 1/4, down 7 1/2 cents
• December Chicago Wheat (WZ): $5.67 1/2, down 8 1/4 cents
• July/September Spread WN/WU: -16 1/4, unchanged

? Market Headlines:

• Sources familiar with the situation reported on Wednesday that Egypt's state grain buyer had bought sever hundred thousand tons of wheat in recent weeks for July/August delivery. The purchases come following a sharp drop-off in imports through the first half of this year due to elevated purchases at the end of last year.

• Sources reported that Russian exporters have set export prices for the new wheat crop that is about to be harvested at $184 USD/ton, which is down sharply from values reported last week in the $226-230/ton ballpark. Experts say new crop harvest could drive prices even lower in the short term, but add that yield concerns in the south could lend offsetting support.

Summary:

Falling Russian FOB values were the main reason given by newswires for the decline in wheat futures values on Wednesday, though similar to corn, bearish headwinds throughout the whole of the ag space were likely just as much to blame. We didn't hear a lot new today on the harvest front, as rains across the eastern Plains and western Midwest the last 24 hours have likely slowed progress a bit in these areas.

Corn

• Old crop corn futures have made new contract lows multiple times over the past week, as downward momentum continues to control price action for the most part. The current contract low at 4.08 will be first support the rest of this week, with the even $4 level support below here.

• On the topside this week, retracement resistance from the late-May high to the recent contract low comes in first at 4.30, and then at 3.36 1/2 and 4.43 1/4. The June high is then above here at 4.51.

• RSI has fallen below the oversold level of 30.0 this week, and is currently at 25.9; this would support reversal action should it occur.

Soybeans

• Chop, chop, chop on the soybean chart; prices continue to trade sideways, and have remained in the 10.30-10.80 range seen since the start of summer until today, when prices fell out to the downside.

• As of today, first support over the next week will come in at the even $10 level, which has been longstanding support. Should $10 fail, the April low at 9.85 will be the next downside objective, while the contract low is below here at 9.66.

• Resistance this week will come in first at the 100 and 200-day moving averages, which are both near 10.48. Above here, last week's high at 10.80 1/2 would be the next upside objective, and then the 2025 high is just above the even $11 level.

In Other News

• Livestock markets saw another day of mixed/choppy trade on Wednesday:
• August live cattle: $208.97, down 57 cents; inside day lower
• August feeder cattle: $302.30, up 5 cents; inside day lower
• July lean hogs: $112.82, up 60 cents

• Outside markets saw more mixed trading on Wednesday, as crude oil rebounded a bit from previous days' lashings:
• Crude Oil Futures: up around 80 cents/bbl
• Stock index futures: The Dow Jones index is down 120 points, the S&P500 index is unchanged, and the NASDAQ is up 30 points
• US $ Index: down 20 points

• Petroleum data in this morning's EIA report showed crude oil stocks in the week declining 5.836 mil bbls to 415.106 mil, while gasoline stocks were down 2.075 mil bbls to 227.983 mil and distillate stocks were down 4.066 mil bbls to 105.332 mil. Implied gasoline demand in the week was estimated at 9.688 mil bbls/day, compared to 9.299 mil last week and 8.969 mil in the same week last year.

• NATO members agreed to President Trump's calls for increased defense spending on Wednesday, agreeing to raise levels from 2% of GDP to 5% by 2035 in what Trump said was a "great victory." Trump also expressed more clear-cut commitment to the fundamental principle of collective defense during today's session than yesterday's, which is a good sign for other allies.

Weather Outlook

? Short-term Forecast:

• Still not a lot new on the Midwest forecast the rest of this week, as southeastern US ridging works its way east and more seasonal temps are seen working their way back into the western Corn Belt. The east looks to stay warm through the weekend and into next week, but thunderstorm chances also look to return in the same period, providing moisture relief to crops here.

• Because this moisture will come via convective thunderstorm activity for the most part, exact precip amounts/locations will be difficult to predict into next week.

• On the global front, there is some localized flooding concerns in a few areas in China after recent heavy storms, while parts of Brazil saw frosts overnight last night that could have possibly caused a minor loss of production. To the Brazil situation, we would note that at this point a few million tons of production here likely makes little difference to the market; the crop is massive and that is the bottom line.

? Extended Forecast:

• Precip outlooks in the week two period (July 3-9) are also similar to yesterday, and continue to show a mixed bag for the Corn Belt in both the EU and GFS model solutions. Like we mentioned yesterday, best rain chances in the period look to be in the southern US, as moisture flow from Mexico will impact the four-corner states and Gulf moisture will keep the US southeast wet.

• Models have continued to keep the warmest air temps in the extended period focused on the western US and areas west of the Rockies, while any forecast for extreme prolonged heat through the Corn Belt remains absent into mid-July.