Corn futures gapped higher overnight due to a significant drop in weekly crop ratings and talk of a significant downward revision to ending stocks in the next USDA report. Dec corn surpassed the 3.50 price mark for the first time since July 10 on gains of 6-1/4 cents to 3.51-1/4. Corn crop ratings dropped 5% to 64% good-to-excellent as warm, dry weather pushes this year’s crop to maturity and shrinks yield potential. Iowa move to 50% G/E as the impact of the derecho and dry weather deteriorate the crop.
Soybean futures rose 10 cents overnight to get prices back to the top of last week’s higher trading ranges. Crop ratings fell 3% to 69% G/E and dry weather across the corn belt could cut into yields further, bringing concern for an even tighter supply scenario. Demand in the market is strong and tighter supply will support the likelihood of a break out to the upside. Nov beans, at 9.15 are already above their moving averages.
Wheat futures were up 3 to 4 cents overnight in Chicago and KC; steady in Mpls. The disappointing close on Monday is noted and the longer term trends are bearish. Advancing U.S. wheat harvest coupled with higher than expected yields for Russia and Canada are factors for market pressure, but the short-term trends are firm and we look for the weak dollar and surge in row crop prices to benefit the wheat trade this morning.
Live cattle futures are called steady to lower. Technical chart action finished weaker in reaction to Friday’s heavy Cattle on Feed report, and channel support for Oct live cattle at 10.72 is being tested. Strength in retail values is supportive, but, though still undeveloped, early indications are that cash trade started at $105 yesterday, down $1 from last week.
Lean hog futures are called steady to higher. Hog futures consolidated on Monday. Then, yesterday’s afternoon edition of the latest cold storage data came out showing total frozen pork supplies down 25% from last year. October is running a discount to the cash index, which will also keep buyer support under the market. Farther out, the market faces headwinds from concerns over the ability of the market to absorb the large supply.