What Traders are Talking About:
* USDA's weekly export sales: Corn sales were impressive at 1.155 MMT for 2008-09 and 117 MT for 2009-10. Combined old- and new-crop soybean sales were just above the top end of the trade guess at 443,600 MT. USDA also announced a daily sale of 660,000 MT of soybeans to China for 2009-10. Wheat sales were slightly below the bottom end of the guess range at 241,900 MT. The strong corn sales show value buying showed up as corn prices dropped. That would suggest another solid week of sales will be reported next week.
* Labor Dept. June jobs data showed nonfarm payrolls declined 467,000 in June. That was higher than the trade guess of 363,000 jobs lost. The unemployment rate rose to 9.5% from 9.4% in May, but that was better than feared as economists anticipated the unemployment rate would climb to 9.6%. This data is disheartening in that a month-to-month pattern of fewer jobs lost had developed and this stopped that streak.
* China continues to buy U.S. beans. The country has booked three to four cargoes since last week. Tight old-crop supplies and strong demand remain the fundamental fuel behind the soybean market. Everyone is waiting on Chinese demand to slow and for their government to release state-owned stockpiles, but the Chinese buying keeps surfacing.
* Focus ahead of the holiday weekend will be on post-Fourth forecasts. While current conditions are non-threatening, the National Weather Service continues to show a heat dome building in the South and spreading up into the Corn Belt into the middle of the month. The presence of normal to above-normal precip in the outlook for that period is keeping traders from getting concerned about hotter temps.
* Feedlots in the Plains are content on getting higher cash cattle prices. If packers don't raise cash cattle bids ahead of the weekend, feedlots appear content to carry supplies into next week. Typically, carrying cattle supplies forward is not price-friendly. But in this situation, it appears feedlots have the upper hand in negotiations.
* Holiday meat clearance will be watched closely. Both beef and pork need strong holiday clearance as demand remains the concern in meat markets.
* Holiday trading schedule: Grain and livestock markets will observe normal trading hours today. All markets and government offices are closed Friday, July 3. Have a happy and safe holiday weekend!
The Long and Short of It:
Soybeans are set to face profit-taking ahead of the long weekend, while corn will face pressure from favorable growing conditions and wheat will be weighted down by seasonal pressure. Outside markets will add to price pressure on grains.
Given the premium cattle futures now carry to expected cash trade, the upside will be limited unless higher cash cattle trade is confirmed or funds actively buy ahead of the holiday weekend. In hogs, it's just a matter of when the corrective buying shuts off and the fresh selling resurfaces.
Send comments or questions to: bgrete@profarmer.com.