CORN
Corn futures traded two-sided overnight and are down 3 to 4 cents this morning. Dec corn is at 5.50 which is where most of the contract’s moving averages are situated. Tight supplies in the U.S. along with tightening world grain prices suggest that corn prices, while choppy, could also remain mostly rangebound. Spot basis bids for row crops shipped by barge to the U.S. Gulf for export rose on Friday on tightening supplies of old-crop grain and fears that Hurricane Ida could stall the harvest and possibly disrupt vessel loadings at New Orleans export terminals, traders said. Mississippi River elevators owned by Archer-Daniels-Midland, Cargill, CHS, Bunge and Zen Noh are used to load and inspect bulk shipments of corn, soybeans, and wheat to send overseas, and appeared to be in the direct path of the storm. The Mississippi River was flowing in reverse in southeastern Louisiana as Hurricane Ida forces vast volumes of sea water ashore, according to flood-control authorities. As far as this week’s economic focus, the Fed Chairman focused more on the pandemic than battling inflation, making it clear that they would not pull back their support of the economy until the pandemic was “solved”. The dollar was choppy to lower overnight, trading well off of it’s recent highs. Weekly Export Inspections and Crop Progress will be out today. All in all, the corn market remains stuck in neutral awaiting further market-moving news.
SOYBEANS
Soybean futures were mixed overnight with Nov trading a range from 13.36-1/4 to 13.17. The contract is down 2 to 13.21-1/4 this morning. For the month, the contract has shed about 30 cents. Nearby Sept is down 14 cents this morning to 13.45-1/4. Recent rains in the north U.S. Midwest could increase the final U.S. 2021 crop from USDA August guess of 4.339 bil bu. This could add to U.S. 2021/22 carryout of 155 mil bu. The key will be the USDA Sept 10 crop estimate and Sep 30 estimate of September 1 U.S. soybean stocks. The market will be keeping a close eye on Hurricane Ida’s impact on maturing crop is that region. Today’s price direction is unclear from a technical perspective. Support is building at nearby trendline daily lows, while 50 and 100-day moving average resistance has created a ceiling just above last night’s high. Chinese Jan bean futures last night were down 81 yuan ; Soymeal up 18; Soyoil up 2; Palm oil up 22; Malaysian palm oil prices overnight were down 80 ringgit (-1.85%) at 4253.
WHEAT
Wheat futures were up overnight with Dec Chicago and KC contracts 7 cents higher to 7.39-1/2 and 7.31, respectively. Both contracts stuck close to 10 and 20-day Moving averages on the charts to begin the week. Dec MPLS wheat was up a nickel to 9.22-3/4. As the rains push into the Midwest, this could create some field delays but we don’t expect a significant impact on wheat. Overall, the wheat market is reflecting supply concerns. Last week, the International Grains Council lowered world wheat production by 6mmt by dropping the Russian, Canadian, and U.S. production numbers but raising Australian and Ukrainian production. Today, we will get a Stats Canada report, which is expected to show a lower all-wheat crop with an average estimate of 22.6mmt. The expanding La Nina pattern is causing more concern for Argentina’s crop. The non-U.S. wheat exporter stocks to usage ratios are record low and we expect in September the USDA to continue to drop the Russian crop.
CATTLE
Cattle futures are called steady to lower. With prices trading nearly $3.00 off the highs last week, the market posted a reversal on the weekly charts, and longer term charts look toppy. Seasonally, cattle/beef prices have a tendency to work lower and we may be hitting that seasonal window. The cash market last week was firm, but still disappointing. Light trade occurred in the North at $125 to $129 live, and a range of $200 to $208 dressed, with most being about $203, mostly steady to $2 firmer than last week. In the South at mainly $121 to $123 – steady to $1 firmer relative to the prior week. The Choice cutout ended the week $5.64 higher and Selects increased $3.18/cwt. While prices did increase the movement was much smaller than previous weeks, which suggests buyers are beginning to pullback. Friday’s carcasses closed softer, Choice down 1.93 to 345.34, and Select dropped 4.07 too 315.52 on light movement of 69 loads, reflecting the softness seen in the market this week. Technically, after the weak closes on weekly charts, cattle charts look challenged, and the direction early in the week will be key.
HOGS
Hogs are called mixed to higher following strong buying support to end last week as prices broke out of the most recent consolidation range. Last week, October hogs saw strong price swings, but finished the week 2.10 higher. The strong move higher opens the door, technically for additional short covering this week as money seemed to be leaving the cattle market and flowing into the hog market. Closing carcass values on Friday saw boxed pork values up .19 to 116.59 on moderate demand of 306 loads, softening from midday levels. Pork values trended higher to close the week, after pork carcass values closed at $110 on Wednesday, a nice $6.00 jump going into the end of the week. A weaker cash tone is limiting gains in deferred contract, and the Lean Hog Index traded 1.55 lower to 104.76 and lost 3.39 for the week. National Direct prices were softer on Friday, closing $1.32 lower to $92.54 with a range of $90-97 on carcass base pricing. The strong price action last week improves the technical picture in the front-end hog futures, but the key will be follow through this week. October prices are challenging trendline resistance over top recent highs, and may need more fundamental news to push higher.
Author
Matthew Strelow