GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 1 to 4 cents higher.
Wheat: 1 to 3 cents lower.
GENERAL COMMENTS: Soybean futures reached a 2 1/2-month high overnight as the market extended Monday’s rally triggered by USDA’s smaller-than-expected crop estimate. Corn and wheat futures weakened overnight. Malaysian palm oil futures rose nearly 6% behind demand from India, while front-month crude oil futures are down around 50 cents. U.S. stock index futures signal a lower open and the U.S. dollar index is up around 1,000 points.
U.S consumer prices unexpectedly rose in August as lower gasoline prices were offset by gains in the costs of rent and food, a Labor Department report noted. The consumer price index gained 0.1% last month after being unchanged in July, contrary to economists’ expectations for a 0.1% drop. Year-over-year, the CPI increased 8.3%, a deceleration from the July’s 8.5% rise. Today’s numbers likely provide further impetus for the Federal Reserve to hike its benchmark rate another 75 basis points following the central bank’s policy meeting next week.
Crop Consultant Dr. Michael Cordonnier made no changes to his corn or soybean yield forecasts, which remained at 170 bu. and 50.5 bu. per acre, respectively. For corn, he lowered his acreage estimate another 300,000 acres below USDA’s harvested figure, which lowered his production forecast to 13.68 billion bushels. For soybeans, Cordonnier is using USDA’s harvested acreage figure for now, which trimmed his production forecast to 4.37 billion bushels.
Ten of 12 railroad workers’ unions have struck new labor deals, but there are two holdouts — the Brotherhood of Locomotive Engineers and Trainmen and the International Association of Sheet Metal Air, Rail, and Transportation Workers. The unions had just advanced a proposal that included an allowance that workers can take unpaid time off for a doctor’s appointment without being disciplined, according to Dennis Pierce, national president of the 57,000-member Brotherhood of Locomotive Engineers and Trainmen, a Division of the Teamsters Rail Conference.
A strike could impact all major railroads, including BNSF, Union Pacific and CSX Transportation. Fertilizer shippers are already preparing for the worst. “Rail networks are complicated, and carriers must make preparations ahead of a potential stoppage to keep certain types of cargo safe and secure,” Fertilizer Institute CEO Corey Rosenbusch said.
France reduced its forecast for this year’s drought-hit corn crop by 1 MMT to the lowest level since 1990. Corn production, excluding seed corn, is now expected at 11.33 MMT, 8% below the ag ministry’s initial projection in August.
India’s palm oil imports in August jumped 87% from a month ago to the highest level in 11 months as a sharp drop in prices prompted refiners to ramp up purchases, a trade body said today. Higher palm oil purchases by the world’s biggest vegetable oil importer could support palm oil futures and help top producer Indonesia in bringing down ballooning inventories. India’s palm oil imports in August rose to 994,997 MT from 530,420 MT in July, the Solvent Extractors’ Association of India said.
Taiwan tendered to buy up to 65,000 MT of corn to be sourced from the U.S., Brazil, Argentina or South Africa. Japan is seeking 97,373 MT of wheat in its weekly tender. Jordan passed on a tender to buy 120,000 MT of optional origin milling wheat but issued a similar tender with a later closing date.
CORN: December corn overnight fell as low as $6.90 after rising 11 cents Monday to $6.96, the contract’s highest close since June 21. Prices likely will remain supported after USDA on Monday lowered its estimate for the U.S. corn crop more than expected.
Also Monday, USDA reported 53% of the U.S. corn crop in “good” or “excellent” condition as of Sunday, down from 54% a week earlier and one percentage point below trade expectations. USDA said 5% of the crop was harvested, up from the 4% average for the past five years. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop inched 0.3 point lower to 340.2. CCI ratings have declined for nine straight weeks for corn.
SOYBEANS: November soybeans overnight reached $15.08 3/4, the contract’s highest intraday price since June 22. USDA lowered its estimate for the U.S. soybean crop to 4.378 billion bu., with an average yield of 50.5 bu. per acre. Analysts expected production of about 4.496 billion bu. and an average yield of 51.5 bu. per acre.
Late Monday, USDA reported 56% of the soybean crop in “good” or “excellent” condition as of Sunday, down from 57% a week earlier and 1 percentage point under trade expectations. Based on the Pro Farmer CCI, while the soybean crop dropped 1.4 points to 342.2, 2.7% below the average for the second week of September.
WHEAT: December SRW wheat overnight fell as low as $8.56, after dropping 10 3/4 Monday to $8.58 3/4. USDA said 85% of the spring wheat crop was harvested as of Sunday, up from 71% a week earlier and two percentage points above expectations.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-weaker
CATTLE: Live cattle futures may gain support from expectations the cash market will reverse a recent slide. Packers pushed 604,000 head of cattle through slaughter lines last week, the largest figure for the week of Labor Day since 2007. While the average cash cattle price eased 40 cents last week, the recent strength of cash market weakness is likely nearing an end as feedlots are highly current and slaughter supplies will decline. Choice beef cutout values rose $1.68 to $258.94, up from a four-month low. Movement totaled 97 loads. October live cattle rose 7.5 cents Monday to $145.75, the contract’s highest close since Aug. 17.
HOGS: Lean hog futures may face pressure from ongoing cash market weakness. The CME lean hog index is down another $1.28 to $98.29 (as of Sept. 9), the lowest level since late February. October futures fell $1.30 Monday as the market paused from a recent trend of sharply reducing nearby futures’ discount to the index. With the discount under $6.50, buyer interest in the lead contract is likely to be limited until the cash index shows signs of stabilizing. Pork cutout values rose $2.84 to a three-week high of $105.71. Movement was strong at 325 loads. October lean hogs fell $1.30 to $91.875.
China will release the second batch of pork from state-owned reserves this week as Beijing seeks to ensure ample supplies ahead of the upcoming holiday season. Pork prices have surged recently as supplies have tightened.