By MATT PIKE
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GENERAL COMMENTS:
September corn closed up 1 1/4 cents and December corn was up 1 1/4 cents. August soybeans closed down 12 1/4 cents and November soybeans were down 10 1/4 cents. September KC wheat closed up 1 1/2 cents, September Chicago wheat was down 3/4 cents, September MIAX Minneapolis wheat was up 1 3/4 cents.
The U.S. Dollar Index is up 0.01 at 97.52. The Dow Jones Industrial Average is up 141.0 points at 44,653.0. August gold is up $3.80 at $3,320.70, September silver is down $0.16 at $36.59 and September copper is down $0.1520. August crude oil is up $0.03 at $68.36, August ultra-low sulfur diesel is down $0.0330, August RBOB gasoline is up $0.0029 and August natural gas is down $0.131.
CORN:
September corn futures traded 1 1/4 cents higher on Wednesday to $3.99 1/4. New-crop December futures were up 1 1/4 cents to $4.15 1/2. It was a marginal recovery for corn on Wednesday as prices managed to bounce of daily lows, but September futures failed to regain support above $4.00 and December remained below former support near $4.20 as traders clearly remain tentative about exiting short positions ahead of the USDA report Friday, but more importantly ahead of what remains a friendly weather outlook for corn pollination through the middle part of July.
The Energy Information Administration released their weekly Petroleum Status report early Wednesday, pegging ethanol production in the U.S. at 1.085 million barrels per day (mbpd), snapping a three-week decline. Ethanol production through the first few days of July remains a steady 3.7% ahead of the 2023-24 corn marketing year. Ethanol stocks were reported at 24 million barrels, down slightly from the previous week, but up 1.5% from the same period in 2024. Ahead of the USDA report on Friday, I am still forecasting slightly less corn used for ethanol in 2024-25 than USDA, at 5.450 billion bushels (bb) versus USDA at 5.5 bb. However, it must be mentioned that there is wide variability in ethanol production and subsequent corn usage through July and August historically, so I would not be surprised to see USDA leave their estimate unchanged in Friday's release.
Despite the clear pricing in of a higher than trend yield for 2025, it is unlikely given the history of the July WASDE that USDA will change the corn yield on Friday. That along with slightly less acreage thanks to the update at the end of June, should leave 2025 production less than previously estimated. The biggest changes to the balance sheet will come from the 2024-25 ending stocks, of which I remain nervous that increases may come eventually due to less feed, residual and ethanol usage than currently being forecasted. The good news is that potential for increased exports still remains, which should partially offset any reductions to other categories either in Friday's report or subsequent reports. Still, the bottom line is that for Friday, new crop ending stocks are expected to be estimated at quite a bit lower than in the July 2024 WASDE report.
For corn technicals, the relative strength index on December corn is showing the potential for a diverging bottom pattern, essentially meaning the drop in prices this week has less momentum than the previous drop seen over late June. This could be a signal that traders are growing satisfied with their risk profile and heavy short positions heading into the crucial weather period for corn pollination. Immediate support is seen just below $4.10 for December futures, while the bullish target remains to reclaim support above $4.20.
The DTN National Corn Index finished Tuesday at $3.85. Wednesday's futures close and implied corn basis of 13 cents under the September board would indicate the index on Wednesday afternoon to be near $3.86.
SOYBEANS:
August soybeans fell another 12 1/4 cents on Wednesday to $10.09. New-crop November soybeans were down 10 1/4 cents to $10.07 1/4. The August soybean contract has given up 46 cents of value through the trading week thus far as traders are apparently seeing enough reason in the good weather to remove risk premium from the market despite the relatively low acreage for soybeans in the U.S. as compared to last year. Concern over export demand next year is certainly playing a role in the bearish price action this week.
For Friday's WASDE, the average trade estimate for 2024-25 soybean ending stocks is for a slight increase to 358 million bushels (mb). I am torn at this point between the surprisingly high June 1 stocks of 1.008 bb, and ahead of pace crush and exports. It would appear if there were a surprising drop in demand, it is coming from the residual category currently. That being said, I wouldn't be surprised to see stocks hold near 350 mb in Friday's report. As for new crop, I find it also unlikely that we will see any change to the yield, so most likely any changes to 2025-26 carry out will be a result of the aforementioned adjustments to beginning stocks (2024-25 ending stocks) for the marketing year. The average trade estimate ahead of Friday is for 304 mb of soybean ending stocks for 2025-26, as compared to the estimate in 2024 of 435 mb.
For soybean technicals, November futures broke support at $10.15 en route to the lowest close for the contract since April 10. $10.00 is likely the next round of support above the tariff induced plunge to $9.80 seen in early April.
The DTN National Soybean Index finished Tuesday at $9.68. Wednesday's futures close and implied soybean basis of 53 cents under the August board would indicate the index on Wednesday afternoon to be near $9.56.
WHEAT:
Wheat futures were mixed to slightly higher on Wednesday with September Kansas City prices trading 1 1/2 cents higher to $5.24. Chicago futures were fractionally lower on their September contract, while MIAX Minneapolis September futures traded 1 3/4 cents higher.
Friday's WASDE report will include USDA production estimates for the winter wheat crop, which is over 50% harvested as of the beginning of the week. The Dow Jones survey of analysts is on average calling for a decrease in production as compared to the June WASDE and NASS Crop Production reports. Assuming the June 1 stocks estimate released on the June 30 of 851 mb is accurate, the expectation is that 2025-26 wheat stocks will also decrease modestly with the average trade estimate calling for a 5 mb decline to 893 mb.
On the world stage, I will be interested to see how USDA sees China's winter wheat crop after a spring full of speculation regarding the drought conditions experienced in several key growing regions in northeast China. Beyond that, Russia and the EU will also be of key interest to traders, given the reversal in opinions regarding the Russian crop after a very poor start to the growing season, thanks in large part to timely rains this spring.