Corn Market Update

? Prices:

• September Corn (CU): $3.98 1/2, down 3/4 cent
• December Corn (CZ): $4.17 1/2, down 3/4 cent
• September/December Spread (CU/CZ): -19, down 1/4 cent

? Market Headlines:

• This morning's weekly ethanol report from the EIA showed average daily production in the week ending July 18th at 1.078 mil bbls/day, which is down less than 1% from last week and down 2.5% from the same week last year.

• US ethanol stocks in the week saw a surprising build, with data showing the number up 3.4% from last week and up 5.5% from the same week last year at 24.444 mil bbls; this was also a new 8-week high.

• Corn usage in the week was estimated at 106.5 mil bu, which brings cumulative marketing year use to 4.871 bil bu; this compares to 4.742 bil last year, and the USDA's full marketing year forecast of 5.500 bil bu.

Summary:

The corn market was left to drift lower on Wednesday as aside from weekly ethanol data this morning, there was little to nothing new on the news front to get traders excited aside from the same ongoing stories that have been talked about for weeks. Following one of the lower volume days of the last two months yesterday, trade was even more constrained today, leaving prices to trade small ranges throughout the entirety of the session. As it stands today, big yields have been priced in and it will likely take confirmation of a number above 181.0 bu/acre for new crop futures to make new lows from here; stay patient as prices look to continue be sideways/choppy in the short term.

Soybean Market Update

? Prices:

• August Soybeans (SQ): $10.05 3/4, down 4 1/2 cents
• November Soybeans (SX): $10.22 3/4, down 2 3/4 cents
• August Soybean Meal (MQ): 272.0, down $1.80/ton
• August Soybean Oil (LQ): 56.14, up 0.51 cents/lb
• August/November Spread (SQ/SX): -17, down 1 3/4 cents; new contract low at -17 1/4

? Market Headlines:

• Overnight and early morning strength in the soybean market was tied to Chinese buying of several Brazilian soybean cargoes, but was unable to be held onto as spill over selling from the rest of the space took over at late morning.

• Board crush margins made new contract highs on Wednesday, which continues to be negative for meal as the current fundamental situation means crushers have incentive to produce, adding to the oversupply of meal and leading to lower prices.

Summary:

Wednesday was a rather quiet day in the soybean market despite price action that was on the choppier side. Spread activity in the product markets was the complex's main feature for the day, with the beans themselves trading pretty much the same range that they did on Tuesday. As we get into the critical August weather period in another week, current two week forecasts of wet and cool weather should keep rallies limited in the short term; that said, beware of changing forecasts, with any appearance of heat or dryness likely to quickly add premium back to prices.

? Prices:

• September Chicago Wheat (WU): $5.40 1/2, down 9 cents; inside day lower
• December Chicago Wheat (WZ): $5.61 1/4, down 8 1/4 cents; inside day lower
• September/December Spread (WU/WZ): -20 3/4, down 3/4 cent

? Market Headlines:

• Day 1 of the Wheat Quality Council's annual three day crop tour of North Dakota's hard red spring wheat crop showed above average yield potential based on surveys of 167 fields in the state. The group pegged average yield at 50.0 bu/acre, which compares to 52.5last year and the five-year average of 45.1. Final results will be given on Thursday.

Summary:

News was also limited in the wheat market on Wednesday, with there being very little in terms of a good reason for the day's decline. There are thoughts/hopes that the Russian squeeze on the market is ending as harvest in the country's central growing regions begins with hopefully improved quality, but there is not a lot of evidence that this has happened yet today. Otherwise, lower prices in Europe and chart-related selling were the only other reasons talked about for the day's down move.

Corn

• Sideways trade has been the theme in the corn market over the past week, with prices late last week challenging 50% retracement resistance at 4.08 3/4 before failing and falling back towards $4 through the first part of this week.

• This, along with last week's high at 4.11 will be initial upside targets over the course of the next week, with the open chart gap from 4.13 to 4.17 1/4 longer term resistance above here.

• First support this week will continue to be the even $4 level, with the contract low then below here at 3.91 1/4. Continuation chart support then comes in at 3.77 and 3.60 3/4. which mark the low from last fall and the low from 2024 respectively.

Soybeans

• The soybean market has also given back some ground gained last week on Monday and Tuesday this week following a trade to 10.37 on Friday. This will mark first upside resistance this week, while the 200-day moving average is just above here at 10.39.

• Above here, the open chart gap from 10.47 to 10.50 3/4 remains our longer term upside objective, with the July high then just above here at 10.64 1/4.

• Support over the next week will be seen again at the even $10 level, and then below here at last week's low of 9.93. The spring low at 9.82 3/4 and the contract low at 9.64 are then longer term support below here.

In Other News

• Livestock markets had another strong day, with cattle again making new contract highs:
• August live cattle: $227.02, up $2.05; new contract high at 227.40
• August feeder cattle: $331.52, up $3.25
• August lean hogs: $108.47, up 72 cents; outside day higher

• Outside markets traded mixed/mostly higher on Wednesday on trade deal optimism:
• Crude Oil Futures: up 10-20 cents/bbl
• Stock index futures: The Dow Jones index is up 450 points, the S&P500 index is up 40 points, and the NASDAQ is up 80 points; new contract highs for the S&P
• US $ Index: down 15-20 points

• This morning's EIA report also gave weekly petroleum stocks data for the week ending July 18th:
• Crude Oil Stocks - down 3.169 mil bbls to 418.993 mil bbls
• Gasoline Stocks - down 1.738 mil bbls to 231.129 mil bbls
• Distillate Stocks - up 2.931 mil bbls to 109.901 mil bbls
• Implied gasoline demand in the week was estimated at 8.967 mil bbls/day, compared to 8.489 mil last week and 9.456 mil in the same week last year.

• The Financial Times reported earlier this morning that the EU and US were close to reaching a trade agreement similar to the one Trump announced overnight with Japan; the deal would see European imports get a 15% tariff as opposed to the 30% Trump has threatened would go into affect on August 1.

Weather Outlook

? Short-term Forecast:

• Weather forecasts for the back half of the week show showers and thunderstorms continuing to impact the northern Midwest, with there being a fairly sharp dry line stretching north out of east TX through AR/MO and into southern IL/IN/KY. Totals according to the EU model to the north look to range from 0.5-1.5" generally speaking between now and early Saturday morning.

• Temperatures the rest of the week look to be above average, but have been backing off a degree or two every day this week from what was seen on Sunday/Monday, as the most extreme forecasts look to be avoided. However, highs will still be in the mid/upper 90's across a good chunk of the Midwest and mid-south into the weekend, with triple digits then seen returning to some areas next week.

? Extended Forecast:

• By the end of next week though, cooler air is seen returning, with both the GFS and the EU models calling for well below average temps for most all of the eastern US August 2nd through the 7th.

• Precip in the 8-14 day period remains fairly mixed, though the GFS model at mid-day trended more in line with the wetter EU model for the western Corn Belt and central Plains. Both still see dryness in the Great Lakes region and into Canada, but are otherwise wet elsewhere.