CORN

Corn futures were higher overnight with December futures achieving the 3.71 price level for the first time since March 16 of this year on gains of 2-1/2 cents.  The strong close on Friday brightened the technical picture heading into this week.  Money flow has been moving into the corn market, and with USDA lowering corn yield to 178.5 and carryout to 2.500 billion bushels for the new crop year Manged Money is likely to build on the their new net long position.  As of today, Managed Money is net long an estimated 57,000 corn contracts, as well as holding a long position in the entire bean complex and SRW wheat.  Strength in beans will provide additional support to corn, and the market will be digesting the views of the two Presidential candidates as they relate to the Renewable Fuel Standard requiring refiners to blend billions of gallons of the corn-based fuel into gasoline.  USDA Weekly Export Inspections and some of the final Weekly Crop Ratings will be out today.  Lastly, farmers participating in U.S. crop subsidy programs reported “prevented plantings” by Sept. 1 of 6.078 million acres of corn, 1.451 million acres of soybeans and 1.268 million acres of wheat and 10.072 million acres for all crops, the USDA said on Friday.

SOYBEANS

Soybean futures were higher overnight. The USDA chopped soybean yield by 1.4 bushels per acre and carryout to 460 mil bu, fueling a strong finish to last week and follow-through last night.  November beans surged to another new high on gains of more than 10 cents to get to 10.08-3/4 before trimming gains. The potential for additional supply tightness with the demand tone extremely strong, soybean prices have enough fuel to move higher.  Managed Money is net long an estimated 195,000 soybeans; net long 42,000 lots of soymeal, and; long 88,000 soyoil.  The 6 to 10 day forecast for the Midwest see mostly dry weather to continue through the weekend.  A front is expected to bring light to moderate rains to MN, IA and WI by around Tuesday of next week.  Little to no rains are seen for the rest of the region.  Temperatures are seen running below average in most of the region.

WHEAT

Wheat futures were mixed overnight with a firm tone as strength in row crop prices spill over to support the complex.  The USDA moved world wheat ending stock to 319.4 MMT, and 3 MMT which was above expectations.  This confirms that global wheat supplies are still plentiful and that will weigh on global wheat prices.   Managed Money net long and estimated 22,000 contracts of SRW Wheat.  In tender Activity- Jordan seeks 120,000 tons of optional-origin wheat; S. Arabia bought 745,000 tons of optional-origin wheat; Tunisia bought 25,000 tons of optional-origin soft wheat and 75,000 tons of durum wheat.

CATTLE

Live cattle futures are called steady to firmer.  Prices consolidated this week, but the technical trend is still lower.  Strength in hog markets helped support cattle futures the latter half of last week, while a weaker cash market tone limited gains earlier in the week.  We’ll look for cattle to take cues from hogs this morning, too.  Friday’s cash market firm up to $1 higher/cst  than early-week trade.  In addition, softening retail values bring demand concerns into the cattle market.

HOGS

Lean hog futures are called higher.  Technically, we could see a third consecutive day where prices have gapped higher following the discovery of African swine fever in wild hogs in Germany that pushed hogs limit higher on Thursday and Friday.  Talk of pork product export bans for German products would have to be filled by U.S. and Brazilian sources.  Friday, hog prices were supported by solid weeks of export demand with weekly sales at a strong 30,200 MT of new pork sales.

Author

Matthew Strelow