July Corn -3 1/4 cents/bu (4.48 3/4)

July Soybeans -20 3/4 cents/bu (11.79 1/4)

July Chi Wheat -12 cents/bu (6.27 1/2)

CAD -0.00525 (72.665)

Crude Oil -0.29 (75.28)

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The short-covering rally that lifted the market yesterday ran into a wall of selling today. Since last Friday, July Corn is up 2 1/2 cents, July soybeans are down 36 1/4 cents, and July wheat is down 41 cents (8th consecutive lower day).

Competing fundamental factors are in conflict, but the market ran with all the bearish news it could find today.

One of those factors is the US weather situation, which holds US production possibilities completely open with an upside yield equal to the downside. Monday we will get the first look at soybean's crop conditions report. After that, it will be the June WASDE report that likely gives the markets direction into the end of next week. Whether forecasts can pull rain into the near term for Russian wheat areas will also be closely watched for coming into Monday. 

Another factor is the proposal which Brazilian President Da Silva put forward with little warning to the industry. The regulation closes the PIS/COFINs loopholes and the Ag industry/exporters lose the 7.6% tax refund/credit. The kneejerk reaction of the market yesterday centered around the idea that the yet-to-be-congressionally-approved regulation would restrict exports because costs would increase for exporters. Thus, they would have to increase their offers to the export market and thus lose business.

If we are talking International news, we can't ignore China. China‚Äôs released an economic report that showed they only imported 10.22 mmt of soybeans in May. This is down 1.8 mmt from May the prior year. The cumulative season import data from China shows a shortfall of 2.2 mmt. The USDA forecasts an import program +.5 mmt vs the prior year. A slower-than-expected demand from China, which dominates imports with a 60% market share, puts a damper on bullish rallies. That being said, we did actually see private exporters report sales of 104,000 metric tons of soybeans for delivery to China during the 2023/2024 marketing yea today.

And if we are talking China, Russia is not far behind. No Russian headlines were active today to spur the market to shortcovering mode, so the managed money crowd worked to reapply its net short today.

Funds were thought to have been mixed today with corn a buyer of 7,000 contracts (short 210,000), while soybeans were thought to have been sellers of 6,000 contracts (short 43,000), and wheat sellers of 5,000 contracts (short 50,000). On Tuesday, corn was 38,000 contracts shorter than expected, while soybeans were 10,000 contracts shorter, and wheat was 26,000 contracts shorter.

Have a great weekend!

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