CORN
Corn futures remained stuck in neutral overnight to begin the week. Dec corn is down 4 cents this morning to 5.52-1/2 as weekend rains carry over into the start of this week’s weather pattern in the Midwest. The market remains in a tight consolidation phase heading into Thursday’s WASDE report. U.S. 2021-22 corn yields are seen cut to 177.4 bushels per acres (BPA) vs the USDA’s July estimate of 179.5 BPA, according to the average in a Bloomberg survey of as many as 27 analysts. U.S. corn production seen at 14.97 billion bu, 194 mil bu lower than in July. Ending stocks are seen 162 mil bu lower at 1.27 bil bu. Brazil corn production is seen 5 mil tons lower at 88 mil tons. With the majority of analysts looking for bullish data, even a neutral report could push prices lower. Weekly Export Inspections will be out later this morning, Crop Ratings this afternoon. Weather forecasts for the western corn belt this week hold isolated to scattered showers through Friday with temps above normal through Thursday, near normal by Friday.
SOYBEANS
Soybean futures were narrowly mixed overnight with Nearby Aug up 3 cents to 14.24-1/4 and Nov off 2 to 13.34-3/4. The market is likely holding tight until the WASDE report on Thursday as buyers remain on the sidelines. The average of analyst estimates is expecting the USDA to decrease carryout and production on this report. With the majority of analysts expecting bullish changes on the report, even a neutral result could take the market lower. Technically, prices are coiling for an eventual breakout, if even modest, from a pennant flag formation on the charts. In the meantime, August rains are occurring in quite a few sections of the Midwest. This is leaving little reason for prices to rise at this juncture in time. Overnight, Chinese Sept bean futures were down 49 yuan ; Soymeal up 24; Soyoil up 86; Malaysian palm oil prices overnight were down 59 ringgit (-1.38%) at 4215 ahead of a key report that will probably show reserves in second-biggest grower Malaysia climbed in July.
WHEAT
Winter wheat futures are weaker this morning, Spring wheat firm. Price action in Chicago and KC contracts is holding onto the top side of the psychological level of $7.00 after retesting the previous week’s highs. Sept Chicago is down a nickel to 7.14, KC down 4 to 7.01-3/4. Sept MPLS is up 1-3/4 to 9.18. The average trade estimates for Thursday’s USDA report include a lowering of the U.S. wheat 2021/22 carryout to near 644 vs USDA 885. Some are as low as 590. With the recent issues in Russia many think the USDA’s world wheat number may be too high as well. The trade estimate for World 2021/22 wheat ending stocks are near 288.1 mmt vs USDA 291.7. The trade estimate for U.S. all wheat crop is near 1.723 bil bu vs 1.746 in July and 1.826 last year. Weather-wise, periods of showers in the Northern Plains are causing harvest issues. Periods of showers moving through the Canadian Prairies are deemed too late for damaged wheat, causing harvest issues instead.
CATTLE
Cattle futures are steady to higher. The cattle market has continued to consolidate, with the range getting tighter, and may be setting up for a strong move one way or another. Friday’s price action in live cattle was very strong rallying off the early session lows. Whether that was new money buying cattle or position squaring, should lead to some support to start the week. Cash trade last week had moderate to active trade occurred in the North at $124 to mostly $125 live and $197 to mainly $198 – $2 to $3 higher than the previous week. Moderate volumes traded in the South at $119 to $122, with the bulk at $121 – $1 higher than the prior week. Weekly slaughter, with Saturday kill was 641,000 head, down 8,000 head from last week. With carcasses weights hold steady at 816 lbs, total production last week was 528.3 million pounds, just under the previous week’s totals. With overall slaughter falling light to expectations, this allowed the packer to price product sharply higher at a time when buyers need Labor Day inventory. Choice boxes advanced $17.36, and Selects increased $16.95. The strong retail week should bring buying optimism to the markets this morning.
HOGS
Hogs are called steady to higher on follow through from finishing mostly higher on Friday, recovering some of Thursday’s losses. It was a volatile week last week in the hog markets, but Friday’s price action limited the losses for the week. The later or deferred contracts saw triple digit gains to end the week. The August contract failed to get a bid on Friday with the influence of the nearby cash market. The lean hog index did gain .70 to 112.48, but the spot cash was quiet, and that weighed on the August futures. Carcass has been trading softer for the majority of the week, but jumped 5.60 at mid-day Friday to support the market. Prices softened into the close, gaining .55 to 123.67. The disappointing close could put pressure on price direction to start the week. Technically, October hogs turned the corner higher on daily charts on Friday, and with carcass values trading at $123, and the spread between October and August historically high, this could lead to some technical buying to start the week.
Author
Matthew Strelow