Markets are trading lower this morning, with beans continuing their post-report move lower with the much larger-than-expected production bearish prices, with the downtrend continuing. Wheat and corn are pulling back as well, although their weakness is mostly from spillover weakness in the beans.

Managed funds on report day were estimated as net buyers of 10k corn to reduce the net short to 246k, net sellers of 8k beans to push the net short out to 193k, and net sellers of 2k wheat to push the net short to 75k.

Crop progress showed corn rated 67% g/e (66 expected), beans rated 68% g/e (67), and spring wheat rated 72% g/e (74 expected).

The USDA surprised the market on Monday with a 1m acre increase in harvested bean acres. National corn and bean yields came in high as well, but the biggest surprise was the bump in acres. The corn and wheat reports were relatively neutral except for spring wheat, which saw a large production reduction. The corn ending stocks came in near expectations with improved demand offsetting larger supply.

China’s central bank said they would provide $14b to banks to support rebuilding areas that were hit by flooding after recent weather damaged 6m acres of crops.

This morning, CONAB estimated total Brazil corn production at 115.65mmt (USDA 122) and bean production at 147.38mmt (USDA 153). They estimated an 11% drop in wheat area for the 2024/25 marketing year. Grain shipments out of Argentine ports have resumed after the government ordered workers to suspend a week-long strike.

The Russian grain union reported Russian wheat area shrank by 4% this year due to wheat’s low profitability.

Corn posted a bullish key reversal on Monday, with prices dropping to new lows and reversing to finish above the prior day’s high while ending the downtrend. The market is pulling back to test previous trendline resistance, now support, this morning. Support for Dec. is 3.97-3.98 and resistance is now 4.15-4.20.

Beans posted new lows and a new low close on Monday and are dropping to new lows this morning as the downtrend continues. The market is in a long-term support area with the market very oversold. Support is 9.70-9.80 and resistance is 10.00.

Corn is pulling back to catch its breath this morning after putting in a strong performance following yesterday’s USDA report that was not as bearish as feared. With U.S. supplies forecasted at adequate but not burdensome levels, the market will likely take a step back and realize that current prices well below the cost of production are not sustainable. With that said, a return to a major bull market is unlikely unless there is a major change to the U.S. production outlook. Look for a range-trade as we head into harvest with selling interest expected to emerge above $4 Sep. and $4.20 Dec.

Beans sold off hard after the USDA increased acres by 1m, which made the U.S. and global bean supply outlooks even more bearish than feared. There is potential for a bounce as the move to the downside is overdone, but sellers are expected to emerge on rallies with beans expected to underperform the corn and wheat markets.

Corn down 2-3

Beans down 13-14