Ahead of the Open: Soybeans Lead Grains Lower on Threat of New U.S. Tariffs on China Goods

Posted on 06/13/2018 8:05 AM

Crop calls

Corn: Down 1-2 cents
Soybeans: Down 8-10 cents

Wheat: 3-7 cents lower

 

Corn futures seen pulling back from strong gains Tuesday as weakness in soybeans and wheat pull the market lower. The USDA supply and demand report yesterday cut U.S. carryover from the 2017-crop by 80 million bushels and lowered projections for 2018-19 ending stocks 105 million bushels to 1.577 billion, the lowest in five years. Demand is improving for U.S. supplies with smaller world crops. Weather leans price negative as hot temperatures will be offset by some showers over the next week.

 

Soybean futures in full retreat today with July at the lowest in almost a year and November contract touching a 9-month low after prices failed yesterday to hold gains on bullish USDA forecasts.  USDA cut both old- and new-crop carryover forecasts more than expected.  That’s a sign that traders don’t believe the USDA export forecasts or South America crop estimates. The dollar’s rise against the Brazilian and Argentina currencies means more export competition and more acres when growers start planting in September. The bigger issue is buying reluctance as speculation is rising that President Trump will be announcing new tariffs against $50 billion of Chinese products on Friday. This morning, USDA did announce daily sales of 177,000 MT of soybeans sold to unknown destinations, most for new-crop. China has been conspicuously absent U.S. market, so can’t assume sale will be shipped to China.
 

Wheat futures are giving back a large share of Tuesday’s gains. The USDA report was less bearish than expected and prices jumped as shorts covered positions. The USDA reduction in Russia’s crop outlook is positive, but doesn’t mean a quick improvement in U.S. exports. The market seems focused on adequate global inventories and improving U.S. spring wheat outlook.  
 

Livestock calls                                                                      

Cattle: Steady to slightly higher
Hogs:  Higher to start

 

Cattle futures may build on Tuesday’s late rally. Beef market was mixed with wholesale choice carcass bids lower and select up. Demand overall termed light with the only action in beef trimmings for fill-in hamburger orders. A peak in summer buying is nearing as numbers begin to expand.

 

Hog futures to start higher on the support from firming cash bids and wholesale pork. No shortage of supplies to start this week may cap rally attempts as slaughter this week up 6.4% from same time a year ago. Charts look positive for July as prices moved to new swing highs on Tuesday, but momentum is starting to slow.

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