Ahead of the Open: Grain, Soybeans Rebound After Recent Losses Ahead of USDA Reports

Posted on 06/12/2018 7:58 AM

Crop calls

Corn: Up 2-3 cents
Soybeans: 3-5 cents higher

Wheat: Up 2-4 cents

 

Corn futures seen trading higher this morning until the release of the monthly USDA supply and demand report at 11 a.m. central time. Focus is on the size of the drop in U.S. and world carryover forecasts.  USDA continues to understate old-crop demand for corn. USDA’s daily export sales service announced 114,00 MT sold to Mexico for delivery by Aug. 31 and another 38,000 MT for delivery after Sept. 1. Also, watch the size of the cut in Brazil’s corn crop after Brazil government cut its estimate this morning to 85 MMT from 89.2 MMT last month. U.S. corn conditions slipped to 77% rated in good and excellent condition on June. 10, down 1 point from a week earlier when most traders were looking for steady to better ratings.

 

Soybean futures also trade firmer today on small drop in U.S. crop ratings with 11 of the top 18 states showing small deterioration. The successful U.S./North Korea summit may indirectly lead to improve trade relations with China. Anxiety remains high with a Friday deadline for possible new China tariffs announcements. Monday’s weekly USDA export shipment report showed 125,000 MT of soybeans inspected for shipment to China in the week ended June 7. That was largely overshadowed by wet, warm weather forecasts, which will cap rallies.

 

Wheat futures seen mixed waiting USDA changes in both U.S. and world crop production forecasts later this morning.  Harvesting is just beginning to expand and more data needed to size up the U.S. crop size. Traders looking for USDA to forecast  slightly higher 2018-19 wheat ending stocks of 958 million bushels, up from 955 million forecast in May. Export demand remains weak and yet the HRW July discount to September futures has narrowed the past week, indicating underlying domestic demand.
 

Livestock calls                                                                      

Cattle: Steady to lower
Hogs:  Steady to lower

 

Cattle futures seen starting a little lower after a weak close on Monday. Beef prices on the defensive yesterday as much of the Father’s Day and July 4 holiday buying may already be wrapping up. A move by August live cattle below 40-day moving average at $103.40 after closing at $104.175 on Monday may trigger a rush of new selling.

 

Hog futures seen starting lower after failing to sustain early gains on Monday in the face of stronger cash hog and pork markets. Market participants remain nervous about export trade and until there is evidence of improved sales, especially with Mexico, look for more of choppy, lower trade.  Mexico already talking about more pork imports from EU to diversify sourcing.

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