Ahead of the Open: Grains, Soy Slightly Firmer Before USDA Reports This Morning

Posted on 07/12/2018 8:08 AM

Grain Calls

Corn: Steady to up 2 cents

Soybeans: Up 1-3 cents

Wheat: Mixed to mostly firmer

 

General Comment:  Small signs of easing of U.S.-China trade friction helped to support grains and global stocks overnight. After the U.S. unveiled a list of Chinese imports worth $200 billion that could face higher duties, China’s Vice Minister of Commerce Wang Shouwen said “when we have a trade problem, we should talk about it,” according to Bloomberg News. Some Trump administration officials have indicated they are willing to talk if China obliges.  It will be quiet ahead of the 11:00 a.m. CDT release of the July USDA World Agricultural Supply & Demand report. We will see how USDA economists view the trade tariff impact on U.S. and world trade and how much bigger they raise U.S. corn, soybean and wheat production after the June 30 report showed higher planted acreage than farmers indicated in March. Weekly U.S. export sales data released this morning were lower than expected for corn, soybeans, soybean meal and wheat, that will cap early rally attempts.

 

Corn futures seen a little firmer to start ahead of the USDA report. Weather leans negative with scattered rains this weekend expected to cool temperatures and ease crop stress from this week’s heat wave. The U.S attache in Beijing cut China’s corn crop estimate 1.3% to 222 million metric tons from the official USDA estimate last month with no changes in corn import requirements and none expected from the U.S. World corn production will be the focus in today’s USDA WASDE report after Brazil cut its output outlook Wednesday and a German cooperative association warned of at least a 6.8% drop in production with much of the crop still in urgent need of moisture.

 

Soybeans getting a small round of short covering on some signs of easing trade friction.  Overnight, China’s version of the USDA WASDE report cut its soybean import forecast 1.8 million MT to 93.85 million from last month’s estimate and down from 95.97 million estimated in the year that ends Sept. 30. That would be the first annual drop in imports in 15 years.  The China Agriculture Ministry said the tariffs are raising import costs and slowing demand. USDA’s global export trade forecasts will be closely watched today.

 

Wheat futures will be mixed to mostly firmer. China’s Wheat output was lowered by 3 million MT to 126 million as adverse weather curbed output, according to the USDA attache report. China import forecast raised to 4.5 million MT from 4 million estimated by USDA in June with no U.S. imports expected.  German wheat output cut 12.1 % because of dry weather, the association of farm cooperative said today. Expectations for USDA to raise its U.S. spring wheat crop forecast caps rallies.

 

 

Livestock Calls

Cattle: Mixed

Hogs: Steady to lower

 

Cattle seen starting with a mixed tone. Beef prices were mixed and traders are looking for the cash trade to come in on the defensive. Futures found some light buying interest near Wednesday’s lows and another test of those lows will be needed to suggest a short-term low may be forming.

 

Hogs seen opening on the defensive amid lower cash hogs and wholesale pork prices Wednesday. Still, the record discount deferred futures are trading to the cash market argues for some bargain buying and short covering today.

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