CORN
Corn futures were down 5 to 6 cents overnight while slumping to the low end of their tight trading ranges. Dec corn fell to 5.47-1/2 after USDA Crop Ratings improved 2 percentage points to 64% Good-to-Excellent. The new 10-14 day weather forecasts are showing additional rains to the northern Midwest to alleviate some dryness. Corn dented is 8% vs 10% a year ago. Corn dough stage is at 56% vs 38% last week, and 56% a year ago. Corn silking is 95% vs 91% last week, and 96% a year ago. The WASDE report from the USDA is being released on Thursday and the market is likely to chop around until the report is released. Analysts are expecting the USDA to lower U.S. corn yield from their July estimate.
SOYBEANS
Soybean futures contracts were firm overnight led by a 22-1/2 cent jump in the nearby August contract to 14.56-1/4. Nov got as high as 13.43 is up 6-1/4 cents this morning to 13.36 while plotting a course along the contract’s 100-day moving average. Weekly Crop Ratings were left unchanged at 60% Good-to-Excellent versus 74% a year ago, but the Poor-to-Very Poor category increased by 1 point. The trade was expecting little, to no change. Soybeans blooming came in at 91% vs 86% last week, and 91% a year ago. Slow weekly export shipments and weekly export sales look problematic for the market if they continue. We are in a seasonal window where export sales typically accelerate, but early sales to China may be holding off in what is typically our strongest sales period of the year. Meanwhile, August rains for the northern Midwest look supportive for the health of the bean crop. Chinese Sept bean futures were down 25 yuan overnight; Soymeal up 18; Soyoil up 16; Malaysian markets are closed for Holiday.
WHEAT
Winter wheat futures were unchanged overnight, Spring wheat down 2 to 3 cents. Price action in Chicago and KC contracts is holding onto the psychological level of $7.00 after retesting the previous week’s highs in last week’s action. Sept Chicago is at 7.11-1/2 this morning, KC fractionally lower to 7.00-3/4. Sept MPLS is down 2-3/4 cents to 9.06. Outside markets on Monday caused some pressure in the wheat markets as the crude market traded lower and the dollar higher. Those markets are seeing a correction this morning. The spread of new Covid variants which can lower food demand is a concern for the global economy as prices consolidate in a wait-and-see mode. Meanwhile, the U.S. spring wheat crop was rated 11% G/E vs 10% last week, and 69% a year ago. Spring wheat harvest was 38% complete vs 17% last week, and 14% a year ago. Winter wheat harvest is 95% complete vs 91% last week, and 89% a year ago.
CATTLE
Cattle futures are called mixed after a steady to slightly lower to start the week. Monday was first notice day for August cattle, and that added to the selling pressure in the market for the day as long August positions had to be exited or risk delivery. The cash market was firmer overall last week, and August at $123 is fairly priced with cash. The retail values have been firming, and that will be key for the cash market this week. Last week, Choice carcasses gained $17.30, and Select was $16.95 higher. The carcass trend stayed firm on Monday as Choice carcasses gained 3.54 to 299.80 and Select was 3.72 higher to 280.81. U.S. federally inspected beef production fell to 523 million pounds for the week ending Aug. 7 from 528 million pounds in the previous week, according to USDA estimates published on the agency’s website. Cattle slaughter was down 1.2% from a week ago to 641,000 head, and the tighter production allowed the packer to lift retail prices in a time were Labor Day demand was strong. The start of week was a consolidation day for cattle as prices will look for direction later in the week. The USDA WASDE report on Thursday may have an impact on the feeder market, given the corn price reaction.
HOGS
Hogs are called steady to lower for today. Futures saw selling pressure resume in the deferred contracts featuring triple digit losses. With the limit down close in the Oct contract, expanded limits are in effect today. August is trying to pull in-line with the Lean Hog Index ahead of expiration on Friday. The index lost .43 to 112.05, and still has a 3.50 premium to the August contract. October hogs resumed the technical selling and long liquidation that began last week. Since posting a near-term high on August 4, the October contract has lost more than $7.00 of value. Technically, the market is weak and the price action poor. Support levels are being challenged off a longer-term trend line near 84.50. Should that level fail, additional long liquidation will have Oct testing the June 24 low of 80.00.
Author
Matthew Strelow