GRAIN CALLS
Corn: Unchanged to 4 cents higher
Soybeans: 2 to 6 cents higher
Wheat: Winter wheat 4 to 8 cents lower, HRS 2 to 6 cents lower
GENERAL COMMENTS: Corn pushed slightly higher overnight, supported by excessive rains in some areas of the central Corn Belt. Soybeans followed on that strength, as well as finding support from friendly outside markets. Wheat failed to follow the other grains as profit taking after last week’s gains sent prices lower. The U.S. dollar index is roughly 20 points lower at 99.45. West Texas crude oil futures are 50 cents higher at roughly $83 per barrel.
World Weather Inc. said in a Sunday evening dispatch that “weekend rains expanded flooding in the Midwest, raising concern over soybean conditions as pods fill. Mold and mildew concerns will be rising this week for beans on the lower branches of soybean plants and crop yellowing is possible in the most seriously flood impacted areas. Weekend rain was greatest across central Illinois and into west-central Indiana, where totals varied from 3 to more than 5 inches, with doppler radar suggesting 5 to 7 inches occurred in several areas. Lighter rain fell from southern Iowa and northernmost Missouri to Ohio and West Virginia, where 1 to 2 inches and local totals over 3 inches resulted.” The weekend Midwest rain brought moisture totals for the past seven days ending Sunday late afternoon to the range 5 to more than 10 inches in numerous areas from parts of Iowa to Ohio, where flooding has occurred or is still occurring. “Damage to agriculture has resulted from both the derecho of last week (and other severe thunderstorms) as well as from flooding, although flood damage will be more determined by its duration rather than by its occurrence.” Rain frequency and intensity in the U.S. Midwest will slowly decrease over the next week to ten days allowing for runoff to occur, fields to drain and eventually crop areas to dry down. However, total dryness is unlikely and temperatures will be milder than usual keeping the drying rate a little subdued. Weekend rain also occurred in the central U.S. Plains, bringing some needed relief from last week’s oppressive heat and dryness.
The U.S. dollar fell index fell to its weakest level in two months as traders and investors scaled back expectations for further Federal Reserve interest-rate increases following a run of softer U.S. economic data. The dollar index weakness comes as traders cut the chance of a Fed rate hike next month to just one-in-three, down from about 75% expected in late July. The USDX downturn follows soft July figures on U.S. employment and inflation, as well as an unexpectedly weak report on U.S. retail sales. While there are few major releases this week to trigger a material dollar breakout, Friday’s global PMIs may offer the next meaningful test.
Canada’s chief trade negotiator says there’s still a significant amount of work to do to reach an agreement to stave off a new wave of U.S. tariffs this week. Talks were expected to continue through the weekend in search of a deal to lower tensions between the two nations. The U.S. wants Canada to bring back American alcohol to provincial liquor stores and address other irritants in the bilateral relationship, in exchange for reductions in certain tariffs. Earlier on Friday, U.S. Trade Representative Jamieson Greer said Canada needs to scrap its retaliatory trade measures to avoid the new duties.
CORN: December corn futures see first resistance at the July high of $4.92, then the psychological $5.00 mark. Support is at last Wednesday’s high of $4.81 1/2, with firmer support at the 10-day moving average of $4.73 3/4.
SOYBEANS: November soybean futures continued to grind higher overnight. The $12.00 mark is first resistance, with the next target being to overcome the July 29 high of $12.25. The 40-day moving average at $11.86 offers support, with last week’s low of $11.67 1/2 offering firmer support.
WHEAT: September SRW wheat futures slipped overnight. Still, firm support exists layered at the 10- and 40-day moving averages of $6.54 3/4 and $6.45 1/2, respectively. Futures find resistance at the July 30 high of $6.86 1/2.
LIVESTOCK CALLS
CATTLE: Choppy/lower
HOGS: Choppy/lower
CATTLE: Live cattle and feeder futures are expected to open choppy to lower this morning. News of Tyson closing multiple packing plants and potentially selling another induced a sell-off on Friday morning that pushed futures to multi-month lows.
HOGS: Lean hog futures are expected to open choppy to lower. With the August contract officially off the board, the now front-month October futures are trading at a sharp discount to the CME lean hogs index, which could add price volatility in the near-term. The most recent CME lean hogs index is down 2 cents to $95.87.