CORN

Corn futures hit pause overnight atop a multi-week high after yesterday’s jump to 3.55 in the December contract.  Crop conditions dropped more than expected, and with hot temperatures and spotty rain coverage seen for the next few days, many analysts are expecting production estimates to come down.  Overnight rains were mainly confined to the norther longitude of the U.S. and into central Michigan.  The 6 to 10 day forecast has both models indicating fairly healthy rains in all of the region followed by below average temperatures for next week.  The 11 to 16 day holds less rainfall with temperatures possibly getting in the low 30’s in far northern sections of the Midwest by the end of the period.  China demand remains very strong and it is tough to quantify how much corn China could buy moving forward.  Fund traders are likely covering shorts as well amid expectations that the balance sheet is getting tighter.  Heading into today they’re estimated to be net short 65,000 corn contracts. Reminder that First Notice Day for September grain contracts is Monday, Aug 31.  Traders holding long positions risk taking delivery and will be exiting, or rolling by this Friday.

SOYBEANS

Soybean futures were firm overnight with Nov up as much as 3-1/2 cents to a new summer high of 9.23-3/4.  This is the highest price for the contract since early March where those price levels now serve another source of resistance for bullish traders to challenge.  Funds are net long an estimate 115,000 soybeans; net long 7,000 lots of soymeal, and; long 61,000 soyoil.  Heat and dryness has likely affected the U.S. soybean crop more than the corn crop and it is unclear how much relief the rains forecast for later this week will actually provide.  There is talk of record South American supplies for 2020/21 but, there is also concern about dry planting conditions and a possible La Nina weather pattern developing.

WHEAT

Wheat calls are mixed this morning after trading two-sided overnight.  Chicago wheat futures have added more than 30 cents in value over the past few weeks, but the fate of the markets are a bit unclear moving forward.  On one hand, the lower U.S. dollar is supportive, and wheat can often find overflow buying interest from row crops.  Technically, the market ran into some Fibonacci resistance on Monday and Tuesday, and given expectations for huge Russian, Canadian and Australian crops, long term upside may be limited.  Tender activity showed Egypt bought 530,000 tons of Russian wheat.  Managed funds are net long an estimated 2,000 contracts of SRW wheat.

CATTLE

Cattle futures are called steady to higher.  Friday’s bearish Cattle On Feed report brought sharp selling action on Monday morning, but there is talk that a large portion of the Placements number was made up of light cattle that won’t be market-ready for quite some time.  There is also concern that poor pasture conditions could bring extra cattle to market in the near term which could create a pullback in the beef markets.  Cattle futures rebounded nicely yesterday and filled the gap left from Monday’s drop.  The fundamental cash trend and a constructive chart pattern in hogs is providing sources of support for cattle.

HOGS

Hog markets are called mixed this morning.  Futures moved to their highest prices in months yesterday, but pork values have been choppy at best as of late, even despite the weak US dollar, Cold Storage report showing relatively tight supplies and a positive tone to US-China trade relations.  The technical trend looks higher, and with bullish moving-average crossovers seen lately, momentum may be able to push prices higher.

Author

Lisa Heder