Ahead of the Open: Grains, Soybeans Seen Up on Corrective Rebound; Livestock May Rally

Posted on 06/20/2018 8:05 AM

Ahead of the Open

Corn: Steady to up 2 cents
Soybeans: Steady to up 2 cents
Wheat: Up 6 to 8 cents

Corn futures will try to build on overnight strength. Much of the concerns about escalating U.S./China trade issues are overdone as U.S. supplies are now the cheapest in the world, indicating further improvement in overseas demand. U.S. corn is a value buy. To build on yeseterday's strong paring of more than 20-cent losses, July corn needs to climb above $3.58 and December rally above $3.80 in early trading today. Both contracts failed to reach those levels overnight. Weather remains negative in the next week with showers and cooler temperatures. After June 26 the outlook is much warmer and drier. No immediate threat unless rains fail to return in early July when a majority of corn will be pollinating. 

Soybean futures seen edging a little higher on Wednesday, with the market taking a breather after nearby futures fell to their lowest in almost a decade yesterday before rebounding than 45 cents from the session lows. That's a classic sign of a selling exhaustion. Most of the buying is short covering rather than new longs as fears continue to swirl from an escalating U.S.-China trade spat. July futures reached an overnight high of $8.95 1/4 failing to exceed yesterday's late-session recovery high. Keys today are a move above $9 in July and $9.17 in November to build on yesterday's recovery.

wheat prices may rise as rains are stalling over HRW fields in Kansas and Nebraska this week, leading to harvesting delays and potential crop damage to what is already a smaller crop. Futures well contained inside of yesterday's large ranges overnight. Strong basis continues to suggest underlying demand with rising concerns about dry weather in parts of the Black Sea, eastern Europe and Australia.

Livestock Calls

Cattle: Steady to higher
Hogs: Steady to higher

Cattle futures should build on Tuesday's high-range close on speculation packers may need to bid higher for cash cattle to complete weekly kills. Wholesale beef prices were lower Tuesday, with select carcass values down $1.90 and choice falling $1.01. USDA releases its June 1 Cattle on Feed report with analysts looking for feedyard numbers to be up 3.4% from a year earlier will placements see down 4.4%. Smaller placements and active marketings should help to keep a firm tone to the market. 

Hogs should open firmer on improving cash markets. Bids firm on Tuesday for both live hogs and fresh pork cuts. Cash hogs are at the highest this year and that should provide support to discounted futures and help prices recover from yesterday selling tied to trade issues.  


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