CORN

Corn futures are called mixed today as the December contract takes over as the lead month following the expiration of the September contract on Monday.  Dec was down 1-1/2 cents overnight on strong farmer selling on this rally that may be more of a product of technical buying and support from the bean complex.  China locked in 350,000MT of U.S. corn on a new export sale on Monday morning, as well as an additional purchase from Japan that is helping underpin the the corn market.  In addition, corn conditions dropped 1% to 60% in the good-to-excellent category.  Headwinds for the market are in the form of the latest 2.5 billion bushel carryout projection.  Though lower than the 3 billion carryout projection earlier in the year, 2.5 bil is estimated to be 250 million bushels higher than last year, keeping the supply side of the corn market heavy.

SOYBEANS

Soybean, meal and oil futures traded an inside session last night with Nov beans staying above 10.00 at 10.05 on gains of 5-1/2 cents.  The strong demand tone in the face of potentially lighter supplies factors into the buying support in the soybean market.  New export sales of more than 400,000 metric tons to China and unknown destinations favors the near record long position held by Managed Money.  They are estimated to be net long 199,000 soybeans; 40,000 lots of soymeal, and; 93,000 soyoil.  A technical close above the $10 mark (Nov) could usher in additional buying.  Soybeans conditions dropped 2% to 63% good to excellent, this should help support prices today.  Later planted soybeans saw the biggest benefit from the rains last week.  Some unexpected rains in Illinois will help yields of later planted soybeans as they continue to add pods now with adequate moisture.

WHEAT

Wheat futures trade two-sided overnight and are expected to repeat that performance in today’s session.  The softening dollar combined with USDA moving world wheat ending stocks to 319.4 MMT, thus confirming that global wheat supplies are still plentiful spell consolidation for the winter wheat complex.  U.S. wheat production estimates will be released in the September 30 small grains update. The trade will keep an eye on rising Russian wheat prices and a strong demand pace.  In tender activity, the following countries are seeking option-origin wheat:  Pakistan 170,000 tons, Ethiopia 200,000 tons,  S. Korea 38,000 tons; and, Japan 104,000 tons.

CATTLE

Live cattle futures are called mixed.  Futures pushed higher on unwinding of long Lean hog-short Live cattle spreads, as the hog trade took profits.  In addition, cash cattle traded firmer toward the end of last week, signaling a potential bottom in the near-term cash market weakness.  Cash trade is undeveloped so far for this week, but indications are for mostly steady trade with last week.  Retail values stay soft, keeping demand concerns alive in the market.  Technically, Dec cattle, at 111.70 are teetering on keeping the bullish chart pattern alive.

HOGS

Lean hog futures are called mixed.  The discovery of African swine fever in wild hogs in Germany pushed hogs aggressively higher last week and profit taking was triggered on Monday when follow-through buying failed to materialize.  Confirmation of a pork product export ban for German products resulted in classic “Buy the rumor, sell the fact” type trade.  Carcass cutout values are keeping support under the cash market overall.  Now that the rally has widened the discount of cash to the futures market, a pull back cannot be ruled out.

Author

Matthew Strelow