CORN
Corn futures were firm overnight, managing to avoid slipping below Tuesday’s new multi-month low close of 5.10-3/4. Dec is at 5.15 this morning, up 4-1/4 cents. All eyes are on the contract’s 200-day moving average support drawn at 5.04 which roughly coincides with the intra-day low of 5.07 from two months ago on July 9 and the 5.00-1/4 low from May 26. The USDA said after the market closed that corn crop progress ratings declined 1% to 59% good -to-excellent. The market anticipated no change at 60%. Corn dented was 74% vs 59% last week, and 77% a year ago; Corn dough: 95% vs 91% last week, and 97% a year ago; And, maturity was pegged at 21% vs 9% last week, and 23% a year ago. US corn harvest should pick up this week in the southeast. 95% of Brazil’s second corn is harvested while 10% of the new corn is planted. The market could trade choppy with uncertainty and position squaring ahead of Friday’s Supply and Demand report. One firm, Barchart, this week forecast U.S. corn production at 15.4 bil bu with a yield of 183.6 bu per acre. This compares to the USDA’s 14.8 bil bu and 174.6 bu per acre yield.
SOYBEANS
Soybean futures were mixed with a firm tone overnight. Nov beans are up 6-1/2 cents to 12.88 this morning in a tight consolidation range above 200-day moving average support at 12.59-1/4. The market is underpinned by expectations for more sales to China this week now that the US coast guard confirmed that the lower Mississippi is back up and running. Soybean meal, however, has closed lower 6 days in a row and is weighing on the complex as the dollar returns to the August trading range after rallying off of last Friday’s multi-week low. Market watcher, Barchart, forecast this week U.S. soybean production at 4.5 bil bu with a yield of 51.3 bu per acre compared to the USDA’s 4.3 bil bu of production and 50.0 bu per acre yield. Yesterday afternoon, USDA said soybeans were rated 57% good-to-excellent vs 56% last week, and 65% a year ago. Leaf drop was 18% vs 9% last week, and 18% a year ago. Chinese Jan bean futures overnight were down 30 yuan ; Soymeal unchanged; Soyoil down 6; Palm oil up 30; Malaysian palm oil prices overnight were up 88 ringgit (+2.00%) at 4478.
WHEAT
Wheat futures were narrowly mixed overnight with little fresh news to drive prices one way or the other. Dec Chicago and KC contracts are rangebound near 7.20 and 7.17, respectively. Dec MPLS wheat is staying above the $9.00 mark at 9.07-1/2. The market is facing resistance from a higher U.S. dollar and weaker grain trade. Friday’s USDA report is expected to drop world wheat supplies even further while estimating wheat supplies at their lowest level in 8 years. Barchart estimates U.S. HRW wheat production at 45.5 bpa. This compares to the USDA’s yield forecast of 44.5 bpa for all winter wheat varieties. Canadian Spring Wheat Production is forecast by the firm at 773.1 mil bu with a yield of 47.9 bpa. This compares to the AAFC’s 601.1 mil bu of production and 36.4 bpa yield (includes spring wheat and winter wheat, excludes durum wheat). Weekly crop ratings showed planting at 5% vs 5% a year ago. Spring wheat harvest at 95% good-to-excellent vs 88% last week, and 80% a year ago. Looking ahead, the trade is starting to focus on planting conditions for winter wheat.
CATTLE
Cattle are called steady to lower after facing another round of selling pressure as long liquidation and technical selling drives the live cattle market lower. October cattle closed at its lowest level since June 1st, and the technical weakness will likely keep sellers in the market. Seasonal weakness typically seen in this window, have prices searching for a fall low. The cattle market failed to react positively to the news of Brazil halting beef export to China after 2 cases of “atypical” Mad Cow disease was for in a pair of older animals. The market feels that this delay in exports will be very limited in length. Cattle slaughter last week totaled an estimated 624,000 head of cattle, down 4.1% from the same period a week earlier as meat packers sharply reduced Saturday’s kill, according to the USDA. This put total beef production at 511 million pounds last week, 20 million under the previous week, but demand concerns are a factor in the beef market. Choice carcasses have lost $15 since its most recent high, and load activity has been light. At today’s close, Choice carcasses were 1.23 lower to 335.47, and Select lost 2.23 to 301.90. The load count remained light at 109 midday loads. The cash market is undeveloped, typical of early week trade. The trend in the futures could likely push the cash market lower. Both Live cattle and Feeder markets are technically weak, but moving into oversold conditions. This could bring a bounce, but until the fundamentals firm, and money flow turns more positive, the path is still lower.
HOGS
Hogs are called mixed to lower. Hog futures broke to the downside to start the week as prices failed to push through overhead resistance, and technically, lower was the path of least resistance. October hogs are range bound this past week, with $90.00 being a magnet, but Tuesday, price broke to the bottom of the range, challenging support at the moving averages below. The cash market is trending mostly lower. National Direct Daily Hogs prices were softer on Tuesday’s close, trading range of $85.00-$91.00, with weighted average at $87.56, 1.29 lower. The weak cash trend keeps the pressure on the market. Lean Hog Cash index was 1.26 lower to 100.06 and is starting to narrow the premium over the futures. That spread is trading at 11.960. Carcass values are trading softer, in a typical seasonal window for softness. The pork carcass cutout index was down 3.02 to 108.64, reflecting the overall weakness of the retail market. Pork carcass values were stronger at midday trading more than $8.00 higher, but closed down $2.48 to 105.67 with a strong load count of 428 loads.
Author
Matthew Strelow