TFM Midday Update 07-15-2024

CORN

Over the next week or so, much of the eastern corn belt will receive good rain, which is likely to keep a lid on any rallies. Conversely, there is heat and dryness projected for the northwestern Midwest; this could affect corn with shallow roots in areas that were too wet.
According to CFTC data, funds are now short 354,000 contracts of corn, which is their largest net short position since 2019.
Some analysts suggest that there could be as much as 500K-900K acres of prevent plant in corn. In August NASS will give traders an update with seeded and harvested acres with FSA farm data. This could be bullish long term.
Despite the lower trend, so far December corn futures have held support at four dollars. This is an important level from a psychological perspective, and may continue to hold, as corn is technically oversold.

The Commitments of Traders report on Friday indicated that managed funds hold a record short soybean position. On one hand, this could lead to a short covering rally in the event of friendly news. On the other hand, the trend remains lower for now, and they may continue to add to shorts with momentum in their favor.
CONAB’s estimate of Brazilian soybean production is still 5.7 mmt below the USDA’s 153.0 mmt forecast, which was unchanged from last month on Friday’s report. If the USDA revises this number lower on future reports, it could provide some support to the market.
China purchased 4.9 mb of US new crop soybeans last week; this was their first new crop purchase so far. With the drop in US soybean prices, China may come back for more, but so far their absence has been a bearish factor to the market.
Some analysts suggest that soybean prevent plant, as will be reported by NASS in August, could total 400K-800K acres. As in corn, this could paint a more long term bullish picture.

The USDA report last Friday estimated better than expected production for both winter and spring wheat. This is weighing on all three futures classes at midday.
Paris milling wheat futures are down sharply at midday, after having gapped lower on their open. At the time of writing, the front month September contract is down six Euros, and is trading at the lowest level since late April and does not bode well for support to US wheat futures.
Russian wheat export values are said to have fallen again, to $218 per mt FOB, and is also adding pressure to the marketplace. When, and if, Russian export values begin to rise it may help us prices. But for now, this remains a bearish factor.
On a somewhat bullish note, the USDA did increase US wheat demand on Friday’s report. Feed usage was increased, and exports were raised by 25 mb to 825 mb. So far US wheat exports are off to a good start for the season, and this could eventually result in a cut to ending stocks.

Brandon Doherty