CORN
Corn futures are seeing light selling pressure, trading 1-3 cents lower after a firm close on Thursday. Strong outside markets and spillover strength from the wheat market supported the corn market on Thursday, as prices defy harvest pressure. Dec corn futures pushed through resistance at the 20-Day moving average, and posted a high range close, setting up some technical strength for Friday’s session, with 5.40 as the next area for resistance, with support at the 10-Day moving average underneath at 5.24, as well as psychological support at 5.25. For the week, Dec corn futures are trading unchanged, and trying to close higher for the second consecutive week. Weekly export sales were soft at 373,000 mt for last week and at the low end of expectations. Corn export sale commitments are up to 982 mb, 10% more than a year ago. USDA announced that Guatemala bought 138,403 mt of corn for 2021-22 in a flash sale. After rain moves through the eastern corn belt, near-term forecasts are drier, which should aid the harvest pace into next week, and harvest pressure could limit gains. October options expired on Friday and may bring extra volatility.
SOYBEANS
Soybeans are mixed this morning, with weakness light, trading 1-3 cents lower. October options expired on Friday and may bring extra volatility. Soybean market finished with mild gains on Thursday, as buying strength in the grain and strong outside markets supported prices. Soybean future rose for the 3rd consecutive day amid easing concern over U.S. exports & the global economy. While most export terminals at the U.S. Gulf have resumed loadings to some extent and power has been restored to nearly all facilities. The market stays concerned on the demand pace in the near-term. Shipments last week were at just 10.1 mb of soybeans shipped reminding us that more work needs to be done. Weekly export sales were within and near the top end of expectations at 902,900 MT, with China adding new sales of 624,200MT last week. Chinese business will need to pick up but concerns of the shipping capacity in the gulf after Hurricane Ida remain. Talk the Chinese were buying additional Brazil soybeans for October may have limited the upside. Technically, the trend remains down for November soybeans, but prices are holding stubbornly above the June low of $12.40 1/2. Soybean oil market stays supportive, posting firm gains on Thursday, but is trading softer this morning. November soybeans on the Dalian exchange were up 1.7% Thursday, ending at the equivalent of $19.76 a bushel and near its highest price in 2021.
WHEAT
Wheat futures trading slightly lower this morning with losses 2-4 cents lower across all three classes of wheat. Wheat market seeing some overnight profit taking after strong closes on Thursday. Wheat saw good buying strength on Thursday, leading the grain markets higher. A soft U.S. dollar helped provide outside market support. The U.S. Drought Monitor showed increased drought conditions in the southwestern U.S. Plains, while moisture improvement was evident in the northwestern Plains. The 7-day forecast is mostly dry for most of the U.S. and presents some concern to early HRW wheat conditions as crops are being planted. The dryness across the southern wheat belt is a near-term concern, that traders will be watching closely. USDA Export sales for wheat reported an increase of 355,900 mt of wheat export sales for 2021-22, within expectations. Talk about strength in December oats, which closed up 22-1/4 cents yesterday on top of Wednesday’s limit-up close. The ending price of $5.80 a bushel is a new all-time high for the December contract. The strong price surge could pull some potential acres away from competing wheat varieties in the region. Technically, the trends are now up for all three U.S. wheat classes with the strong close on Thursday, but the market will need to hold gains in the near term. All three wheat class are back testing moving average support on the overnight session and holding.
CATTLE
Cattle futures are called steady to lower, due to weak retail values, and choppy trade likely before today Cattle on Feed report, released at 2:00 p.m. CST. Cattle futures saw mixed to mostly higher trade on Thursday, as deferred futures saw mild gains, with only the front month trading slightly lower. The market likely be squaring positions before Friday’s Cattle On Feed Report. Report expectations are for the Sept. 1 herd to fall year over year to 11.19 mil head. That would be the fifth straight month that the feedlot herd declined year over year. August placements are seen down 0.9%, marketings are seen mostly unchanged at 1.89m head. The anticipation of a tighter cattle supply has helped support the deferred contracts with the largest buying strength the past two session in the longer-term positions. The near-term fundamentals stay on the negative side, limiting the upside potential. The country cash trade remains very quiet this afternoon, with the possibility that the bulk of trading is essentially done for the week. A few deals will likely be reported here and there today and tomorrow. So far for the week, most trade has been at $123-124 cans and $198 dressed, mostly steady to slightly lower than last week, as cash trade stays lackluster. Beef carcass values are still struggling to find traction. Thursday trade stayed soft with Choice carcasses losing 2.23 to 305.60 and Select was down .51 to 274.99. Load count was light at 155 loads. USDA Weekly Export Sales saw new sales of 15,800 MT for 2021 were up 3% from the previous week and 17% from the prior 4-week average. Japan (5,100 MT), South Korea (3,200 MT), and China (3,000 MT), were the top buyers of U.S. beef last week. Technically, even with the strength, cattle futures are building a consolidation range, and forming a wedge pattern with a series of higher lows, and lower highs. Prices will be narrowing the range with a potential move, likely coming after the report on Friday.
HOGS
Hogs are called mixed to higher on further follow through buying, but soft close on retail carcasses could limit gains. Like cattle, expect choppy trade before the USDA Quarterly Hogs and Pigs Report released at 2:00 p.m. CST this afternoon. Hog futures surged higher on Thursday, as deferred contracts saw strong buying strength as deferred contracts December and later posted strong triple digits gains during the session. The hog market may be anticipating the Quarterly Hogs and Pigs Report to be released after the close on Friday afternoon. Expectations are for the hog herd to decline 1.7%. Animal kept for breeding to be 1.1% lower than last year, but slightly higher quarter over quarter. Animals kept for marketing at 1.8% lower than last year. Analysts feel the June-Aug pig crops will be 3.4% lower than last year, which may have been some of the reason for the strength in the deferred futures today. The cash market has been trending softer, which has limited upside in the hog markets this week. Beyond position squaring, near-term fundamentals are staying mixed. Direct cash trade has been trending lower, with afternoon Carcass base prices down .63 to 76.53, Live prices were not reported due to confidentiality. The weak prices stay reflected in the Lean Hog Index, which traded .91 lower to 92.56. The discount of futures to the index continues to narrow but is still a 7.90 premium of index to futures, which supported the hog market. Pork carcasses lost midday strength and finished 2.63 lower to 104.29. Load count was light at 280 loads. USDA weekly export sales were strong at 32,600 MT of new sales for 2021, up 29% from the previous week and 12% from the prior 4-week average. Increases were primarily for Mexico (16,300 MT), Japan (6,800 MT), and Canada (2,000 MT). Technically, July futures broke out of the recent trading range and rallied to the 200-Day Moving Average. Prices will likely stay choppy tomorrow, awaiting the Quarterly Hogs and Pigs report.
Author
Matthew Strelow