GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 8 to 12 cents higher.
Wheat: SRW 4 to 8 cents lower; HRW and HRS 2 to 5 cents lower.
GENERAL COMMENTS: Soybeans and corn finished higher overnight, while wheat faced pressure. We expect similar price action at the start of daytime trade. Outside markets are mildly supportive with crude oil firmer and the U.S. dollar index modestly lower.
USDA announced daily soybean sales of 251,000 MT to China for 2023-24.
Traders are starting to position for Friday’s USDA reports, which will include the first survey-based crop estimates for corn and soybeans – cotton, too. USDA will also update its wheat crop estimates, though changes this month are typically minor. Updated U.S. and global balance sheets will also be released. Click here to see the pre-report estimates.
Weather will remain mostly favorable, with multiple rain chances across the Corn Belt, Delta and Southeast, while the Northern Plains, Pacific Northwest and Texas will remain mostly dry for the next 10 days to two weeks. World Weather Inc. says weather models suggest conditions will trend a little drier and warmer in central and eastern areas of the country Aug. 17-23.
Russian ports are overflowing with grain despite record shipments. Port capacity is being stretched with some terminals on the Azov Sea reportedly not accepting grain due to a lack of storage. These smaller ports are more overloaded than the main Black Sea grain port of Novorossiysk, SovEcon said. But any escalation in the Black Sea could have a big impact global grain trade.
Turkish President Recep Tayyip Erdogan said he aims to revive the Black Sea grain deal with an “expanded scope,” calling on western countries to help turn the initiative into the basis for peace between Russia and Ukraine.
China saw a decrease in both consumer and producer prices in July for the first time since November 2020, sparking increased concerns about deflation in the world’s second largest economy. China’s consumer price index (CPI) dropped 0.3% versus last year in July, the first year-over-year decline since February 2021. The cost of food fell 1.7% after rising in the prior 15 months amid a plunge in pork prices. China’s producer price index (PPI) declined for a 10th consecutive month, down 4.4% amid weakening demand and moderating commodity prices.
CORN: December corn futures continue to consolidate around the recent lows. Near-term boundaries extend from $4.89 1/4 to $5.06 1/2. Barring a breakout from this range, near-term price action is likely to remain choppy and relatively light.
SOYBEANS: November soybean futures posted solid gains overnight after finishing well off the lows on Tuesday. Bulls need a close above $13.15 to signal price action the first two days this week was a failed downside breakout from the bear flag formation. Key support is at Tuesday’s low of $12.82 1/4. Near-term resistance extends from $13.15 to $13.54.
WHEAT: December SRW futures continue to consolidate around the recent lows. Near-term boundaries extend from $6.54 1/4 to $6.87 1/4.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mixed tone, though losses the first two days this week signals traders are cautious toward the long side of the market despite a supportive cash market. Cash cattle negotiations have been predictably slow so far this week, with packers wanting to buy cattle at lower prices and feedlots seeking higher values. Wholesale beef prices posted solid gains on Tuesday, with Choice boxes up 90 cents and Select $1.15 higher, while movement improved to 120 loads. Packer margins remain in the red, which will likely make them reluctant to bid up for cash cattle after raising prices last week and buying more cattle than recent weeks.
HOGS: Lean hog futures are expected to open with a mixed tone. While futures are trading at discounts to the cash index, there are increasing signs the hog/pork market has put in a seasonal top. The CME lean hog index is down another 46 cents to $104.58 (as of Aug. 7). The cash index has declined six of the last eight days and is $1.42 below its July 28 peak. The pork cutout value dropped $3.22 on Tuesday to $112.09, down $5.12 from its late-July peak. While pressure on the cash and product markets hasn’t been sharp, there are increasing indications seasonal tops have been posted.