CORN

Corn futures were unchanged overnight.  Without any damaging weather over the weekend, or in the forecasts for the beginning of August, it looks as though an above-average corn yield is more likely than not.  The 6 to 10 day forecast for the Midwest has light to moderate rainfall for most of the region by both the GFS and European models with mostly good coverage; temps are below average this week warming up to a bit above average by the end of this week and the first half of next week.  Chinese demand has been surprisingly strong lately, but it will take much more than China demand to stabilize corn prices as the news has not given the market much, if any lift as prices slump for the fourth week in a row.  There is not much support on the December corn chart in between Friday’s 3.27 close and contract low at 3.22.  The dollar is sharply higher this morning and looks to have Friday’s new low carved out as a near-term bottom for the currency.   Managed Money is estimated to be short an estimated 156,000 corn contracts.

SOYBEANS

Soybean futures were up 3 to 4 cents overnight.  While soybeans are dealing with a much tighter balance sheet than corn, a lack of weather-scares bodes well for the health of bean crop and could attract sellers. Export demand has been solid and has kept strong pressure at bay.  Last week was the largest weekly sales for U.S. beans since October of 2013.  Global resistance is coming from the fact that there is talk of a large acreage switch in Argentina due to economic uncertainty.  Friday’s session wasn’t all that impressive, with November beans making an unsuccessful test of the 10 and 20-day moving average resistance levels.  However, last night’s price improvement broke above those levels with the contract getting to 8.99-3/4 at one point.  The USDA is scheduled to release its monthly fats and oils report at 2 p.m. CDT today.  U.S. soyoil stocks at the end of June were projected to slip to 2.336 billion lbs from 2.447 billion lbs at the end of May; soyoil stocks estimates ranged from 2.297 billion to 2.351 billion lbs.  The U.S. soybean crush is expected to have dropped for a third straight month in June, sinking to 5.333 million short tons, or 177.8 million bushels; estimates ranged from 171.7 million bushels to 186.0 million bushels.  If realized, it would be the biggest June crush on record, eclipsing the previous record of 169.5 million bushels set in June 2018.  But it would be down from a May crush of 179.5 million bushels and the smallest monthly crush since February.  Heading into today’s trade, Managed Money is net long an estimated 67,000 soybeans; net short 18,000 lots of soymeal, and; long 49,000 soyoil.

WHEAT

Wheat markets were down 5 to 6 cents overnight, likely in conjunction with bottoming action in the dollar near the currency’s lowest levels since June 2018.  Disappointing wheat yields in Europe and Argentina may balance out a larger than expected Russian crop.  Still, Black Sea wheat is the cheapest in the world.  The Brazilian wheat crop has the potential to surpass 7 million tons this year and reach a record, provided the weather remains favorable throughout the cycle that has just begun.  Technical action is relatively uneventful, though the winter wheat contracts were able to push through some near term resistance within their current ranges last week.  Heading into today’s trade, Managed Money is net long an estimated 9,000 contracts of SRW Wheat.

CATTLE

Cattle markets are called higher this morning.  Live cattle contracts broke above some major technical resistance on Friday, and with both the cash and beef markets starting to firm up, buyer interest should pull futures higher.  Keep in mind that there is still a gap on the October live cattle chart at 112.42.  The contract settled at 107.87 on Friday.  Feeder prices also look primed to rally, with September making the highest closes Friday since early March.

HOGS

Hog markets are called mixed this morning.  Prices last week took on some technical damage and were not able to spring back with much determination on Friday.  The cash trend is still higher, but enormous weekly pork production will probably keep pork prices on the defensive.  Exports will need to stay strong to avoid another leg lower.

Author

Matthew Strelow