Ahead of the Open: Wheat, Soybeans and Corn Seen Opening Steady to Firm

Posted on 08/08/2018 8:07 AM

Grain Calls 

Corn: Steady to up 2 cents

Soybeans: Up 2-4 cents

Wheat:  Up 2-5 cents


General Comment: The U.S. said Tuesday that it will begin imposing 25% tariffs on an additional $16 billion of Chinese goods from Aug. 23. China followed with their own 25% tariffs on $16 billion of U.S. goods. There was little sign of the trade war taking a toll yet on the China’s trade, with data released overnight showing exports rose faster than expected in July, leaving a surplus for the month at $28.1 billion, still down from $41.5 billion in June. The country’s official factory gauge has been cooling against the backdrop of a weakening yuan, adding to the view that the Chinese economy may be slowing. Scattered rains this week from the Plains to the Midwest have been beneficial for those that got the moisture. The U.S. Midwest weather forecast turns drier into the early parts of next week. Limited rains are seen for sections of the Midwest the second half of next week---temps will be moving from average to above average during the period.


Corn reopening seen slightly higher after a mixed overnight trade as traders position themselves for the USDA report on Friday. U.S. yield ideas have come down the past several weeks with talk of national yield of 180 a distant memory. USDA may raise its national yield forecast to 176.3 bu. per acre from 174 bu. estimated in July, according to a Bloomberg News survey. The surprise may be a larger cut in U.S. and world carryover forecasts than currently expected as smaller world production boosts U.S. exports.


Soybeans seen higher to begin after erasing overnight losses. Futures remain supported by the larger drop in USDA crop ratings this week and a realization that China will have to buy some U.S. beans to satisfy demand from October to March as dwindling supplies in South America won’t meet processor demand. Soybean prices on the Dalian Commodity Exchange jumped almost 4% overnight, biggest daily gain in a decade after customs data showed arrivals fell from June and the U.S. said it would begin collecting tariffs on another $16 billion of China imports later this month. Soybean futures remain below the July 31 highs, barriers that need to be clear to shift the market into a more bullish posture. Palm oil futures rose for a fourth session on expectations for Malaysia crude palm oil export duty for September will be zero down from 4.5 in August to support prices.

Wheat seen steady to firmer as global supplies are set to fall this year after a dry growing season in several top exporting nations.  Output in Germany, the second-biggest EU producers after France, will fall 20% to 19.2 million MT from 24 MMT last years, farm cooperative said Wednesday. Concern also growing that the second-year of drought in Australia will do more damage to yields if dry weather continues into early September. Canada will be hot and dry, curbing yield potential. USDA may trim its world wheat inventories to 254.5 MMT on Friday, down from 260.9 estimated in July, according to a Bloomberg News survey. The Pro Farmer-Doane estimate is 249 MMT and the lowest trade forecast in the survey called for a cut to 245 MMT.


Livestock Calls

Cattle: Steady to higher

Hogs:  Steady to higher


Cattle will open steady to firmer after paring some of Tuesday’s losses by the close when buying emerged just below the 200-day moving averages.  Wholesale beef prices were mixed on Tuesday as Choice cutouts fell 19 cents while Select gained 18 cents.  Sales improved but demand continues to be light to moderate. Cash traded lightly at $112.50 on Tuesday, about steady and should be supportive today.


Hogs futures seen steady to firm after demand for pork improved. Sales jumped to the highest since Dec. 27 on Tuesday as wholesale pork carcass values fell 76 cents to $72.05, down 6.4% from a year ago. The price held above the Aug. 3 low of $71.68, to the lowest since May 8. The national average cash hog price crashed $3.19 on Tuesday, further boosting packer margins.

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