One day after USDA released bullish-looking new-crop estimates for corn and soybeans, support for grains gave way as the July contracts of corn, soybeans and all three wheats closed lower. July soybeans fell to its lowest close in three months, continuing to suffer from lack of demand.
Midday: Trade is lower across the board at midday.
Corn trade is 3 to 5 cents lower overnight with trade backing up along with soybeans at midday with trade failing to sustain post report gains. Showers have fired across the western belt this morning with warm temperatures generally expected to continue through the middle of May.
The second-crop areas of Brazil should catch some showers to mitigate some stress but the crop size should trend lower. Ethanol margins remain stable with corn and ethanol futures drifting lower.
On the WASDE report, old-crop carryout came in at 2.178 billion bushels same as average, and new-crop at 1.682 billion vs. 1.628 billion expected. South American production was pegged at 87.0 million for Brazil, and 33.0 for Argentina, with world stocks at 194.85 million metric tons, down 195.20 expected, with new crop at 159.15 million metric tons vs. 182.00 expected.
On the July chart we are above the 20-day at $3.97 which remains support which we have tested at midday with the next level of support is 50-day at 3.94, with resistance the fresh high at $4.08 1/4 scored last week.
Soybean trade is 15 to 19 cents lower overnight with trade turning lower after failing to hold the initial surge yesterday. Meal is $6.50 to $7.50 lower and oil is flat to 10 points higher.
The recent pattern in South America should remain intact near term with the Real and Peso remaining near record lows to boost export competitiveness
On the WASDE report, old carryout was down 20 million from last month at 530 million, and new crop was 415 million bushels vs. 549 expected. South American production was at 117 million metric tons in Brazil, and up 2 from last month, and Argentina 39.0 million down 1 from last month. World carryout was 92.16 million metric tons of old crop, vs. 90.0 expected, and new crop at 86.70 million vs. 91.10 expected.
On the July chart, trade is below the 200-day at $10.16 with the next level of support the psychological support at $10.00, while the 100-day at $10.27 is resistance.
Wheat trade is 4 to 10 cents lower at midday, following the lead of the row crops along with little fresh news. The dollar rally is fading but remains elevated.
Warmer weather should help to boost maturity with the crop still well behind normal, with further stress likely if not combined with rain, especially for the western edge of the plains, with shower potential focused on the more northern winter wheat growing areas, along with eastern Kansas. Spring wheat growing areas look more open to catch up, especially with the warmer temps.
The Black Sea area will continue to dominate export trade with spring weather not triggering any major excitement thus far with warm dry start, but a wetter nearby forecast. Black Sea values are moving back towards $200 a ton.
On the report, wheat stocks were 1.07 billion bushels vs. 1.067 expected on old crop, new crop was 955 million vs. 923 on average, with production at 1.821 billion vs. 1.757 billion expected, and world stocks at 270.46 million on old crop vs. 271.30 expected, and new crop at 264.33 million vs. 267.70 expected.
On the July Kansas City contract, support is the 100-day at $5.01 support, with resistance the $5.21 area of the 50-day moving average.