CORN

Corn futures were unchanged overnight ahead of this morning’s USDA Weekly Export Sales.  Trade estimates range between 600,000 and 1.50 mil tons for combined old and new crop.  Corn use for ethanol lags the 101.2 mil bu per week needed to meet USDA projections, and with summer travel down this year, demand for fuel will lag as well.  Meanwhile, weather is not overall concerning thus pointing to a large crop and burdensome supplies.  Showers and thunderstorms will bring moderate rainfall to central/southern sections of the Midwest over the next 5 days.  The 6 to 10 day forecast for the Midwest still has limited rains for most of the region with any rainfall favoring southern/eastern sections of the Midwest; temps run below average over the next 10 days.  The technical picture is weak, adding to renewed short selling as the market seeks a seasonal low.  Funds are short an estimated 161,000 corn contracts, and Dec corn is just a nickel above it’s June 26 contract low of 3.22.

SOYBEANS

Soybean futures were down 3 cents overnight, slipping to a 2-week low of 8.81-3/4 (Nov).  Meal was lower, too, soyoil firm.  Expectations are for USDA to raise yield on the August WASDE report.  The potential larger supplies are seen offsetting the strong demand tone and weather is favorable for reaching those yield forecasts.   The U.S. has the cheapest soybean in the world and that should keep demand active for U.S. soybeans.  However, the market is mired in a state of confusion over U.S.-China relations, an upcoming U.S. election, a global pandemic and questions over just how much soybeans China actually needs.  Orders from China for soybeans have increased, but much more is needed to reach an ambitious $36.5 billion target for Chinese imports of U.S. farm goods this year.  Weekly export sales have an expected range of 1.80 to 2.50 MMT, which will provide a hint of underlying support.

WHEAT

Winter wheat futures were down 6 to 7 cents overnight as the market continues to seemingly be up one day and then down the next in choppy chart action.  The weak dollar has been watched closely by the market and is showing stability this morning.  Variable production estimates around the globe are popping and cloud the view surrounding the amount of exportable surplus in the world.  Mpls spring wheat was flat to 2 lower faring better due to expectations for a smaller spring wheat crop.  Meanwhile, fluid global wheat prices support Chicago wheat futures, as prices consolidate at the top of the trading range.  Demand will be the key going forward for U.S. wheat.  Weekly exports sales are expected to be 250,000 to 650,000 mt sold last week. Overnight tender wires showed Tunisia seeking 75,000 tons of optional-origin wheat and Jordan canceling a tender for 120,000 tons of optional-origin wheat.

CATTLE

Live cattle futures are called steady to higher. Cattle futures saw additional buying strength on Tuesday, but are challenging the highs from Monday.  Strength in feeder cattle markets due to lower grain cost help support; And, the cash market is beginning to develop, and most trade is near $97/cwt, and dressed trade at $160, higher than last week and maintaining a stronger week-over-week tone.  We’ll monitor the impact on the market over the huge number of cattle on feedlots over a long time that could trigger an increase in beef production over the near-term.

HOGS

Lean hog futures are called steady to lower with August holding a premium to the lean hog index keeping pressure on prices.  In addition, Oct hogs failed to close above up-trend channel support at 49.92 which could have a negative influence on today’s opening ranges.  Afternoon retail carcasses turned negative yesterday, too.  Weekly export sales should offer some price support if the sales and shipment pace stayed strong.

Author

Matthew Strelow