CORN
Corn futures are seeing light selling pressure, trading 1-2 cents lower after a firm close on Wednesday. Dec corn did trade slightly above yesterday’s high in a tight 2 3/4 cent trading range as prices are held in between the 10-Day and 20-Day moving average, as well as the 5.25 psychological resistance. Traders in the corn market are hearing about a “high amount of variability” in corn yields as harvest is beginning to ramp up. The prospects of improved weather forecast to aid harvest are a limiting factor as the potential for early hedging pressure will likely grow as harvest pace increases. National Weather Service 6-10 day forecasts are predicting above average temperature and below average precipitation outlooks going into next week. USDA Weekly Exports Sales will be released this morning, and expectations are for new corn sales to range from 300,000 to 800,000 mt. A soft export sales number could be disappointing to the market as U.S. exports struggle versus cheaper competitors for global corn sales. The market will be watching for improvement in the corn export selling program, which has been a limiting factor to prices in late summer until now. Corn market may stay choppy and range bound overall, as traders look toward the USDA Quarterly Grain Stocks Report scheduled for Sept. 30.
SOYBEANS
Soybeans are firm this morning, seeing some buying support, ranging 3-4 cents higher. Soybean prices are getting some follow through buying as price held the 200-Day Moving Average on Tuesday and were pushed higher on a round of technical buying on Wednesday. In addition, rumors of Chinese purchases of U.S. soybeans over the past couple of days has help support the market. Talk that the Chinese have picked up cargoes of U.S. soybeans out of the PNW have been rumored, but nothing officially reported on the USDA daily export announcements. USDA weekly export sales will be released on Thursday morning, and the market is expecting a range of 500,000 to 1.1 MMT of new sales on the books. Traders will be looking for strong numbers as concerns on the pace of sales for new crop soybeans is disappointing, running 30% under last year versus a prediction of 7% lower by the USDA. Soybean oil has been a strength in the soybean market, and has been tied the the price movement in crude oil, which fished higher on Wednesday’s trade. Soybean oil is higher on the overnight session, up 60 cents, but Meal is down slightly this morning; Overnight, Chinese Ag futures saw Soybeans up 16 yuan ; Soymeal up 5; Soyoil up 140; Palm oil up 210; Malasyian Palm is up 115. Malaysian palm oil prices overnight were up 115 ringgit (+2.66%) at 4445 on concerns that a peak production season in second-biggest Malaysia may fall short of expectations.
WHEAT
Wheat futures are higher this morning. Dec Chicago wheat 2-3/4 cents to 7.08-3/4, KC wheat is trading 3-4 cents higher, and MPLS wheat followed suit with 4-5 cent gains. All three contracts are seeing follow through strength after a firm session yesterday, supported by the strength in the grain complex. Wheat futures are trying to push through multiple levels of resistance established by moving averages over top. Released export data showed that China’s wheat imports hit the highest level in more than two decades. The country is accounting for 19% of global wheat consumption. The wheat market is optimistic that the trend may continue. USDA Weekly Export Sale report will be released on Thursday morning with expectations of 250,000 to 600,000 mt of new sales on the books. Recent sales totals have been friendly and supporting the market. Winter wheat planting pace is picking up, and traders are keeping an eye on weather forecast for the southern plains, longer-term models are keeping this area below normal on precipitation, which is supporting the market as a near-term concern. Outside markets providing some support this morning as the U.S. Dollar is weaker, and equity markets are trending higher on the overnight.
CATTLE
Cattle futures are called steady to lower, due to weak retail values, but buying strength yesterday could see follow strength today as the market may be squaring positions before Friday’s Cattle On Feed Report. Expectations are for the Sept. 1 herd to fall year over year to 11.19 mil head, according to a Bloomberg survey of ten analysts. That would be the fifth straight month that the feedlot herd declined y/y. August placements are seen down 0.9% y/y. Marketings are seen mostly unchanged at 1.89m head. Technically, even with the strength, cattle futures are building a consolidation range, and forming a wedge pattern with a series of higher lows, and lower highs. Prices will be narrowing the range with a potential move, likely coming after the report on Friday. The market looks to be building a trading range, and possibly is squaring up positions before Friday’s monthly USDA Cattle on Feed report.
Cash trade started to trickle in on Wednesday to start the process for the week. Southern live deals were trading at $124, with some at $123, mostly steady with last week. In northern dress trade saw deals at $198, about $1 lower. The majority of the trade looked to be scheduled for early October delivery. More trade will still be developing later in the week, but trade helped pull futures higher to get in line with cash trade. Retail values stayed soft in tone as carcasses saw selling pressure. Choice carcasses were 3.54 lower to 307.83, and Select dropped 2.51 to 275.50. The load count was moderate at 186 loads. The weak close will pressure prices to start the session today. The spread between choice and select boxes is still extremely wide at 32.33, reflective of the demand seen for choice quality beef. Feeder Cattle followed suit with the live cattle market posting strong gains. The front month September contract is tied to the index with expiration around the corner. Sept feeders were .050 lower to 154.800, and the cash index was .20 lower to 153.57.
HOGS
Hogs are called mixed to higher. Hog futures consolidated, with choppy trade as prices saw soft losses on Wednesday. July futures saw both sides of the range, to finish in the middle, lacking direction. October futures are tied to the cash and retail market, adding to the selling pressure. The cash market remains a concern in a lower trend. Direct cash trade was quiet on Wednesday. Carcass base prices finished .98 lower to $77.16, and Live prices unreported due to confidentiality. The trend is still softer overall, and this is reflected in the cash index, which traded 0.48 lower to 93.56. Retail values are trying to hold a $100 floor, and are now trading $30+ off the most recent highs. At the close, pork carcasses were 4.16 higher to 106.92, with light to moderate movement of 353 loads. USDA Weekly Export Sale Report will be released on Thursday morning, and could give the market some direction into the end of the week. Most likely, hog prices will stay choppy going into the end of the week, waiting for the release of the USDA Quarterly Hogs and Pigs report after the close on Friday. General expectation is for the U.S. hog supply to continue to tighten with total hogs to be 1.7% lower than last year’s levels.
Author
Matthew Strelow