CORN

Corn futures were mostly flat overnight while holding impressive gains posted throughout the week.  The dollar is sharply lower this morning, giving commodities a source of support today.  Dec corn peaked at 3.59 and is up a dime for the week.  It is unclear how much steam the rally will have before lowered production is confirmed.  Rain chances this weekend may put a bit of a damper on buying action even though crop damage has been done.  Growers were hoping for heavy rain in the Midwest on remnants from the hurricane, but there is now less rain in the 10 day forecast.  Keep in mind that ProFarmer’s Crop Tour production estimate, coupled with current USDA demand, leaves ending stocks near levels from the past four years.  This seems to suggest that current prices are fair.  Stiff overhead resistance for Dec lies at the 200-day moving average level near 3.80.  First Notice Day for September futures is Monday, so traders not wanting to face the possibility of delivery on their long positions will need to get out today.  Heading into today, Managed Money is net short an estimated 56,000 corn contracts.

SOYBEANS

Soybean futures traded two-sided overnight near Thursday’s new multi-month highs.  For the week, Nov beans, near 9.45 on gains of 3 to 4 cents overnight, are up 40 cents for the week.  Yesterday’s jump in price pushed futures into overbought territory according to both stochastics and Bollinger Bands.  The pod filling stage has been interrupted with hot and dry conditions, and there is much discussion about soybeans maturing too early.  Technically, some back and fill action looks likely even though the balance sheet is getting tighter.  Managed Money is net long an estimated 142,000 bean contracts, net long 10,000 lots of soymeal, and; long 69,000 soyoil.  Meanwhile, soyoil prices, too lead the complex higher with new highs for the move posted overnight.  China continues to buy U.S. soybeans as South American stocks tighten.  Strong exports out of Brazil during the first half of the marketing year has prompted calls for removing import tariffs on corn, rice and soybeans amid aggressive domestic demand.

WHEAT

Wheat futures are unchanged this morning, underpinned by a drop in the dollar.  Without particularly bullish fundamentals, wheat futures look overbought and vulnerable to a pullback.  The weaker dollar is positive, but record world inventories are bearish and Black Sea supplies are still the cheapest in the world.  We’ll keep an eye on crop conditions in Argentina and dryness in Australia as possible favorable factors moving forward.  Look for choppy, two-sided trade this morning with Managed Money net long an estimated 17,000 contracts of SRW wheat.

CATTLE

Cattle markets are called mixed for this morning.  Last week’s bearish Cattle On Feed report has spurred some technical damage this week.  Cash cattle, between $104 and $106/cwt are trending lower so far this week though beef values have rallied 16 sessions in a row.  Both the live and feeder markets were able to make late-session recoveries back above support, but many believe the number of market-ready cattle on feedlots remain very high and view the rally as short-lived.

HOGS

Hog markets are called steady to lower this morning.  Wednesday’s bearish key reversals still have not been taken out, and the fundamental picture still looks somewhat weak except for exports.  China is the largest buyer for the year so far, followed by Mexico.  Pork prices have been choppy and huge slaughter numbers will keep supplies plentiful.  Stochastics are overbought which could further accelerate a lower correction.

Author

Matthew Strelow