CORN
Corn futures were firm overnight in a modest technical bounce from Friday’s price drop. Dec corn is up 3 cents to 5.40, though now well below the contract’s 100-day Moving Average at 5.53-3/4. Despite a friendly August Supply/Demand report and weaker Weekly Crop Ratings last week, corn prices are struggling as harvest approaches. China’s corn prices have started to decline, too. Outside markets have also played a role in diminished buying interest in corn, though an overnight downward correction in the dollar, and upward bounce in crude is favoring positive trade in corn this morning. Basis bids for corn shipped by barge to the U.S. Gulf Coast for export were steady to firm on Friday as futures prices fell sharply for a second straight session, traders said. Weekly Export Inspections will be out mid-morning, Crop Ratings after the close. Advisory service Pro Farmer, a division of Farm Journal Media, estimated U.S. corn and soy crops above the USDA’s most recent forecast as eastern growing states compensated for drought farther west. Following a crop tour of seven top producing states, Pro Farmer projected that farmers would harvest a corn crop of 15.116 billion bushels based on an average yield of 177 bushels per acre.
SOYBEANS
Soybean futures were up overnight, posting a double-digit price rebound after Friday’s breakout to the downside. Nov beans clawed back into the mid-section of Friday’s 56-1/4 cent trading range with gains of 15 cents to 13.05-3/4. The downward price move from late last week is a negative set-up on the charts moving into the end of the key month for development for the U.S. bean crop. News that the EPA is expected to recommend lowering biofuel blending mandates below 2020 levels is seen pressuring soybean oil, and thus bean futures. However, soyoil contracts are also getting a tech bounce this morning. The agency is set to send a draft of biofuel-blending quotas to the White House for review as soon as Friday afternoon, marking a key step in the Biden administration’s bid to balance competing oil and agricultural interests. Chinese Jan bean futures were down 62 yuan overnight ; Soymeal down 32; Soyoil down 28; Palm oil down 16; Malaysian palm oil prices overnight were up 48 ringgit (+1.13%) at 4313. Pro Farmer’s crop tour results from last week project that farmers would harvest a soybean crop of 4.436 billion bushels based on an average yield of 51.2 bushels per acre.
WHEAT
Wheat futures were up overnight led by double-digit gains in winter wheat contracts. Dec Chi wheat advanced as much as 13-1/2 cents to 7.42-3/4 after shedding 48 cents last week. Dec KC wheat was up 12-3/4 cents to 7.28-1/2 before trimming gains. Dec MPLS wheat rose 8-1/2 cents to 9.10-3/4. Arguably, wheat is overpriced compared with other markets, so the volatile movement in the dollar, which achieved 10-month highs last week, is affecting price movement in wheat. China still needs wheat due to flooding there, and Argentina may be experiencing dry condition in the coming weeks.
CATTLE
Cattle futures are called mixed for this morning. Cattle futures rallied prior to Friday afternoon’s USDA Cattle on Feed report. The report confirmed smaller placements for July continuing a trend line that began last spring. Cattle on feed are 2% under last year. Cash market activity centered on light trade in parts of the South, at $122, $1 higher than the previous week’s weighted averages. Some asking prices remained firm around $123 to $124 in the South, and $202 plus in the North. Since Friday, Aug 13, choice beef is up more than $20/cwt with no signs of slowing. Slaughter numbers recently reached a whopping 665,000 head with plants managing to meet demand. Government subsidies and loan guarantees are possible as part of the Biden administration’s attempt to booster food security. Technically, live cattle are building a base of resistance which, if broke, would support more upside price potential.
HOGS
Hogs are called mixed after gains last week. Technically, last week’s mostly sideways activity signals more consolidation on the charts as prices narrow their respective trading ranges. Pork values have increased $10/cwt in the past week, as well as exports. Since Friday, Aug 13, cutouts have rallied $10/cwt, hams more than $25/cwt and bellies more than $12/cwt. This should buoy prices this morning. Technically, hog futures are trying maintain some semblance of an uptrend. Last week, prices fell far enough to fill the price gap from 8/13. This may help firm up the charts and work prices higher, supported by the strong discount of the cash market to the futures.
Author
Matthew Strelow