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49721

Grains Close Lower as Trade Looks Forward to Tuesday WASDE Report

Corn, soybean, and wheat futures all closed slightly lower Monday ahead of USDA's release of its latest supply/demand and crop production data on Tuesday morning.

The July corn futures contract wound up 2 1/2 cents lower at $3.60 1/2 per bushel Tuesday, while the September contract ended the day 3 cents lower at $3.65 1/2, according to Barchart.com. The July soybean contract wound up 2 1/4 cents lower at $9.74 per bushel and the August contract was 3 cents lower at $9.66 1/2. July wheat closed 1/2 cent lower at $4.81 per bushel, while the September contract ended 1 1/4 lower at $4.88.

Monday's trade came after weekend overnight trading wound up mixed, though corn and wheat gave up overnight gains fairly quickly after the start to today's open outcry session. Soybeans followed to dip into the red around midday despite an expected cut in U.S. soybean ending stocks in Tuesday's USDA World Agricultural Supply and Demand Estimates (WASDE) report. Corn failed to close in the black Monday as traders continue to add to "net short" positions and higher U.S. ending stocks expected from USDA's Tuesday report.

"USDA weekly export inspections were 263,263 MT, above both a year ago and last week. Cumulative export shipments are now 1.699 billion bushels, 167 million larger than last year at this time. On average, traders are expecting USDA to cut projected old-crop ending stocks to 360 million bushels on Tuesday, down 10 mbu from April on an expected bump in projected exports," says Brugler Marketing & Management LLC market analyst and grain broker Alan Brugler. "The weekly Commitment of Traders report from the CFTC showed managed money accounts continuing to add to their net short position. Weekly corn export shipments totaled 44.68 million bushels, above last week but slightly below the same week in 2014. Shipments YTD are 1.66 MMT (65 million bushels) below year ago. SAFRAS has apparently increased projected Brazilian corn production to 82.3 MMT. It would be a new record despite smaller acreage, as last year was 80 MMT. The April USDA estimate was only 75 MMT for this year. Trade estimates (Reuters) for U.S. ending stocks on August 31 are 1.864 billion bushels, up from 1.827 billion in the April WASDE report."

Looking beyond Tuesday's USDA numbers, the trade is expected to continue to track planting progress and weather, which looks to remain on the damp side through much of the Midwest this week. The storyline of growing short positions by ag funds is another one to watch, says Kluis Commodities market analyst and grain broker Al Kluis.

"You can see the major low in January of 2014 at 24.04. From that low, prices rallied up to the major high at 29.40 in April of 2014. From that high, prices dropped down to new seven-year lows last week when prices fell to 21.89," Kluis says of the chart at right. "The chart shows a weekly hook reversal higher. If the DBA can rally and close above the March high at 22.90, that would confirm a major low in commodity prices."

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