Soybeans Rallied on Reduced Volume

MORNING AG OUTLOOK

Grains are higher. US stocks are higher on news of Japan trade deal. USD is higher. Crude is unch and near $65. Gold is unch. US Midwest should see showers. US Treasury Secretary will meet soon with China counterparts in Switzerland. He suggested an extension to trade deal which was to expire Aug 12. Expanded liquidity signals that inflation is not likely to go away and could diminish odds US Fed will lower rates.

SOYBEANS  

In reduced volume, SU rallied to near 10.14. Dalian soybean, soymeal, soyoil and palmoil futures were higher. North and east cornbelt rains should help US soybean crop. Most still feel above average US crop and record Brazil crop should eventually weigh on futures. Demand for US soybean remains uncertain. Some estimate US 25/26 crush at 2,570 mil bu vs USDA 2,540 but exports at 1,600 vs USDA 1,740. This could increase 25/26 carryout to closer to 510 vs USDA 310.  Brazil basis firmed on talk of Increase China buying, and slowdown in farmer selling.

CORN 

In reduced trade interest and volume, CU is near 4.00. Dalian corn futures were lower. North and east corn belt rains should help US corn crop. Above average US crop and record Brazil crop should continue to weigh on futures. Demand for US corn remains uncertain.  Some estimate US 25/26 feed/residual at 5.850 mil bu vs USDA 5,574 this year but exports at 2,400 vs USDA 2,675. Ethanol use is est at 5,600 vs 5,500 this year. All this could increase 25/26 carryout to closer to 2,085 vs USDA 1,660. Brazil safrinha crop harvest is delayed. This and logistics bottlenecks is offering support to Brazil basis.

WHEAT 

WU is near 5.50. KWU is near 5.35. MWU is near 5.94. Russia export wheat prices are higher which could help US and EU export demand. Support is from talk of lower Russia yields and firm cash markets. Resistance is from talk of good summer South Hemisphere crops. Annual US ND wheat crop tour est first day yield at 50 bpa vs same day ly of 52 and 5 year ave of 45. USDA est yield at 59. Some est US wheat carryout at 895. Higher export offset lower feed use.

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