Written Commentary
MORNING OUTLOOK
Grains are higher. SU is up 10 cents and near 13.37. SMU is near 402.8. BOU is near 59.09. CU is up 10 cents and near 5.75. WU is up 28 cents and near 7.87. KWU is up 26 cents and near 8.46. MWU is up 22 cents and near 8.93.
US stocks are higher. Crude is higher. US Dollar is lower. Gold, copper, coffee, cocoa and cotton are higher. Sugar is lower.
News that Russia bombed Ukraine Odessa port had quick negative global reaction after Russia signed an agreement to allow for Ukraine grain exports. This raises uncertainty if grains will be shipped out of Ukraine. What would Russia gain if Ukraine begins to export grain again? Commodity markets continue to find resistance from inflation fears and global Central Banks raising interest rates to slow inflation.
The 00z GEFS (GFS Ensemble) has advertised a strong ridge of high pressure to develop over the central United States next week and by the end of next week the ridge is over the heart of the Midwest. The ridge is quite strong producing excessive heat in the Pacific Northwest and many other far western states in the second half of this week with extremes over 110 in the northwestern states. The ridge progresses to the east this weekend and next week and is over the Plains during mid-week and the heart of the Midwest by August 6-8. The ridge has closed 594 height line encompassing Iowa, Missouri, Illinois eastern Nebraska, eastern Kansas and Indiana at the end of the model run.
There remains fundamental corn bulls. So far they are outnumbered by technical and crop bears. Bulls feel lower EU corn crop and drop in South America corn supply will push CZ futures higher. Dalian corn futures were higher. Matif corn futures has been trending higher due to hot and dry EU weather. Bears look at continues liquidation of Managed funds longs and fact South America corn is a discount to US as negative.
Wheat has traded sharply lower since mid-May highs. Some of this was due to worries about higher inflation and higher US Dollar lowering demand. The potential volume and timing of Ukraine shipments remains an unknown. Russian combines are harvesting wheat in occupied regions of E Ukraine, and Russia military goals may now go beyond the Donbas region. Wheat futures are oversold and end users are short and need to add coverage.
Soybean futures have had mixed news. Drop in China buying of US soybeans has offered resistance. Some feel that last week’s US Midwest warm and dry weather could drop weekly US soybean G/E rating another 2-3 pct. 1 bpa drop in USDA 51.5 yield would drop US 2022 supply 150 mil bu. Dalian soybean futures were lower. Soymeal, palmoil and soyoil were higher.
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