CORN

Corn futures are higher this morning, eclipsing their new highs for the move.  Dec got to 3.57 overnight on gains of 2-3/4 cents as fund short-covering resumes after pausing yesterday.  It wasn’t long ago that Managed Money was net short 280,000+ corn contracts.  They are now estimated to be net short closer to 65,000.  There is a gap below current prices that stands as a bearish target that could be filled at 3.45-1/2 which is where the contract’s 10-day moving average resides.  Overbought technicals are noted and the radar shows widespread, albeit very light rainfall across the country, except of course where Hurricane Laura has made landfall, battering Texas and Louisiana with high winds and rain.  Rains this week, depending on how prevalent, may bring some selling action, though it is unclear how much relief these rains will provide so late in the season.  The 6 to 10 day forecast for the Midwest switched to now seeing a lesser amount of rainfall across much of the region with most favoring the Ohio River Valley; Temperatures will be above average for the rest of the week, then below average for next week.  Trade estimates for this morning’s USDA Weekly Export Sales are zero to 200,000 tons for old crop, 700,000 to 1.30 mil tons for new crop.

SOYBEANS

Soybean futures were up 5 to 6 cents overnight while building momentum to the upside after this week’s breakout of a brief consolidation phase.  Widespread heat and dryness during the pod filling stages makes it seem reasonable to expect the crop to come in smaller than on the August WASDE report.  China is buying beans at a record pace and looks poised to continue strong buying into the later parts of the year.  Some estimate that China has already bought nearly 20mmt of U.S. supplies.  Trade estimates for this morning’s USDA Weekly Export Sales are zero to 200,000 tons for old crop soybeans, 1.20 to 2.20 mil tons for new crop; Soymeal sales are seen coming in from 50,000 to 200,000 tons for 2019-20, 75,000 to 300,000 tons for 2020-21; and, soyoil sales are estimated at 5,000 to 20,000 tons for 2019-20, zero to 15,000 tons for 2020-21.

WHEAT

Winter wheat futures were up 3 to 5 cents overnight;  Spring wheat up 7.   China has been a big buyer of U.S. wheat so far this year, but Black Sea wheat is still cheaper than U.S. supplies and continues to win tenders.  All three futures markets are technically overbought and all three exchanges have run into strong overhead resistance in recent sessions.  There doesn’t appear to be enough positive fundamentals to push prices to new highs for the move, but the cheap U.S. dollar and spillover support from row crops are keeping prices fairly supported.  Trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 700,000 tons.

CATTLE

Cattle markets are called steady to lower.  Beef prices are still rallying, but the market will need to see cash trade firm up this week to keep the trend higher.  Live and futures markets took technical damage yesterday, and though cattle markets have been very resilient in the face of negative technical setups in recent months, there is no guarantee that this can continue, especially in the low-demand month of August.

HOGS

Hog futures are called lower this morning.  The cash trend is still higher, but pork values took a hit at yesterday’s close.  The best-traded October contract made a bearish key reversal yesterday which could be a strong selling signal coupled with the overbought stochastics.  China’s demand has been strong, but there are gaps below current prices that traders may target on back-filling action.

Author

Matthew Strelow