Corn: Steady to down 1 cent
Soybeans: Steady to firm
Wheat: Down 2 to 4 cents
GENERAL COMMENTS: Corn and wheat were slightly weaker overnight, and beans traded mixed in light trader positioning amid generally favorable weather. The failure of markets to react Tuesday to the damage reports from the derecho winds on Monday from South Dakota to Ohio underscores traders’ skepticism that damage will match some early estimates on corn and soybean losses.
Today’s focus is on USDA’s Crop Production and World Agricultural Supply and Demand Estimates that will be released at 11:00 a.m. CT. The report will include USDA’s first survey-based production estimates for corn, soybeans and cotton. But unlike previous years, the estimates will not include field-based assessments of yields. Analysts surveyed by Reuters expect USDA to raise its corn and soybean yield projections, pushing production to 15.174 billion bu. and 4.254 billion bu., respectively. Cotton production is expected to slide to 17.19 million bales. The department is also expected to raise its U.S. wheat crop forecast. U.S. new-crop carryover will likely climb from July for corn, soybeans, and wheat, according to those surveyed. FSAs monthly release of crop acreage data begins today, with the agency providing its update at 2 pm CT on information farmers have provided to the agency on planted acreage, prevented planting and failed acreage.
Global equity markets are not showing any signs of a hangover from yesterdays drop into the close in U.S. markets. Overnight the MSCI Asia Pacific Index rose 0.2% while Japans Topix index closed 1.23% higher. In Europe, the Stoxx 600 Index was 0.3% higher this morning. S&P 500 futures pointed to a bounce at the open, the 10-year Treasury yield rose to 0.676% and oil gained more than 1.5% this morning. The dollar is mixed against the major currencies.
OPEC on Wednesday said world oil demand will fall more steeply in 2020 due to the coronavirus pandemic and said next years recovery faces large uncertainties, pointing to growing headwinds for the group and its allies in supporting the market. World oil demand will fall by 9.06 million barrels per day (bpd) this year, the Organization of the Petroleum Exporting Countries said in a monthly report, more than the 8.95 million bpd decline expected a month ago. OPEC stuck to its forecast that in 2021 oil demand would rebound by 7 million bpd but said the view was subject to large uncertainties that may result in "a negative impact on petroleum consumption".
Soybeans may get a boost at the reopening this morning after USDA announced new sales to China for a sixth straight session. USDA’s daily export sales reporting program announced private exporters sold 258,000 metric tons (MT) to China for new-crop delivery That follows 720,000 MT announced sold to China on Monday and Tuesday and 774,000 MT announced sold to China the last three days of last week. USDA also announced this morning that 120,000 MT sold to unknown destinations for new-crop delivery.
According to the State Council, China will boost imports to ensure domestic supply. The China Agricultural Supply and Demand Estimates (CASDE) showed a 2 MMT increase in soybean imports compared to the prior estimate. The CASDE pegged China 2019-20 imports at 96 MMT and 2020-21 imports at 95 MMT. China corn usage during the 2020-21 year is estimated to be 288 MMT, which is up 0.9% from the previous estimate. The CASDE increased animal feed consumption and decreased refinery consumption, mostly ethanol output. China expects to import 1.75 MMT of cotton during the 2019-20 year, down 250,000 MT from the prior forecast.
China is continuing to buy U.S. goods, particularly commodities, under its Phase 1 trade deal with the United States, despite rising tensions over Hong Kong and other issues, top White House economic adviser Larry Kudlow said on Tuesday. "The one area we are engaging is trade," he told reporters at the White House. "Its fine right now."
Top U.S. and Chinese officials are due to meet for a "routine" video conference on Saturday to assess implementation of the Phase 1 agreement six months after the deal defused a trade war that hurt both nations and the global economy.
U.S. President Donald Trump on Tuesday said his relationship with Chinese President Xi Jinping had soured in the wake of the novel coronavirus pandemic. Trump, who is seeking a second term in the White House in a Nov. 3 election, has repeatedly hammered China for not doing more to contain the virus. The two countries have also been at odds over Beijings crackdown in Hong Kong, Chinas human rights record, and the disputed South China Sea, among other issues.
Meanwhile, Chinas President Xi urged the country to take immediate measures to stop the growth of food waste and highlighted the importance of maintaining food security, especially at a time when Coronavirus pandemic spurs concerns over tightening supplies and surging food prices. Xi is laying out a major initiative to accelerate China’s shift toward more reliance on its domestic economy, the Wall Street Journal reports. In a series of speeches to senior government officials since May, Xi has trotted out the new strategy, translated as “domestic circulation,” prioritizing domestic consumption, markets and companies as China’s main growth drivers. Investments and technologies from overseas would play more of a supporting role.
Corn: December corn was stuck in a narrow 1 1/2-cent range with key resistance at $3.30 and support at $3.20 after today’s USDA reports. Ukraine’s grain traders’ union UGA now estimates the country’s 2020 corn crop at 36.4 MMT, a 2.5-MMT cut from its previous forecast. UGA also lowered its corn export outlook for 2020-21 by 2 MMT to 31 MMT. The union explains that weather has been too dry, shrinking yields. Ahead of the USDA reports, the weekly ethanol production and inventory report will be released.
Soybeans: November beans are sitting just above uptrend line support and funds are still holding net-long positions, leaving the market susceptible to a new round of selling if USDA publishes a strong national yield estimate.
Wheat: Futures retreated overnight after rising Tuesday for the first time in four sessions. The market is pressured by expectations for record world wheat supplies to maintain tough competition for U.S. exporters. Egypt’s tender Tuesday was a non-event as it purchased only 2 cargos of Russian wheat at prices down $5 to $7 from the previous purchase of 410,000 MT of Russian and Ukrainian supplies. The lack of demand and larger crop is pushing Russian exporters to move more aggressively to get sales on the books. Pakistan tender for 1.5 MMT also will be highly competitive, with tenders from Jordan, Syria and Ethiopia still working.
Cattle: Cattle futures settled higher but down from session highs. The steady rally to new swing highs yesterday sets the stage for further gains into September. Cattle futures got a boost yesterday from reports of $1 to $3 higher cash cattle prices. Another week of higher trade signals the market may be working through backlogs faster than expected. Also encouraging, boxed beef prices strengthened on Tuesday and movement was solid at 156 loads. Choice rose 88 cents and Select cutouts gained $1.09. Retailers continue to expand beef featuring. The USDA’s beef feature index last week ticked lower, but the previous week was the highest since mid-March. The trend higher is apparent. As beef prices have normalized, featuring is expanding.
Hogs: The pork cutout value edged 32 cents higher on Tuesday, and movement was impressive at 424.37 loads. Good movement is essential given big year-over-year gains in pork production as the market works through animals backlogged this spring due to Covid-19-related processing disruptions. Cash hog bids fell $1.01 on Tuesday, which contributed to heavy pressure on lean hog futures. The CME lean hog index has moved sidewise after climbing the second half of July. Near-term supplies of market-ready animals remain burdensome, which limits the market’s upside. Slaughter this week is down 16,000 head from a year ago, adding to market concerns about reduce heavy supplies. Today’s an important session because if futures can show some resiliency that will suggest Tuesday’s drop was just a one-day correction and not the start of a larger setback.
Corn: Up 2 to 3 cents
Soybeans: Steady to mixed
Wheat: Up 3 to 5 cents.
GENERAL COMMENTS: Corn and wheat futures are moving slightly higher and correcting oversold technical indicators after USDA cut its weekly crop ratings on Monday. Soybeans are mixed amid better USDA crop conditions in the week ended Aug. 9 after rains moved through the Midwest on Monday and more are in the forecasts later this week. Large short fund positions in corn and soymeal futures is helping to trigger some short covering and profit taking ahead of Wednesday’s USDA Crop Product8ion and supply and demand reports. The August production report is based on farmer surveys but may also provide fresh updated planted and harvested data. The September USDA report that includes field measurements will be more important and provide more insights into how large this year’s corn and soybean crops may rise. Seasonal lows may come from mid-September to mid-October.
Soybeans may get a boost at the reopening this morning after USDA announced new sales to China for a fifth straight session. USDA’s daily export sales reporting program announced private exporters sold 132,000 metric tons (MT) to China for new-crop delivery That follows 588,000 MT announced sold to China on Monday and 774,000 MT announced sold to China the last three days of last week.
A storm packing winds as high as 100 miles per hour moved across Nebraska, Iowa, Wisconsin and parts of Illinois yesterday, with the National Weather Service classifying the storm as “derecho.” The winds flattened some crops, toppled grain bins and semis, damaged livestock operations and left more than 500,000 without power. In the past, such storms have had a devastating local impact, but in many cases the national impact on overall yields was negligible. But it should be pointed out this week’s event comes late in the season and hit some crops that had already been dealing with dryness. The damage to grain storage facilities so close to harvest is also very concerning.
As of Sunday, USDA said most of the U.S. corn crop had pollinated and an estimated 59% of it was in dough, slightly ahead of the five-year average of 52%. USDA trimmed the amount of corn rated “good” to “excellent” (G/E) by one percentage point to 71%, whereas analysts surveyed by Reuters expected no change. But crop ratings are still near historical highs. USDA also said the amount of top-rated beans climbing another percentage point to 74% G/E, whereas traders expected a one-point decline. Cool conditions and some timely rain for most areas aided crops. USDA slashed the amount of spring wheat rated G/E by four percentage points to 69%, erasing last week’s gains and then some. Analysts expected USDA to maintain its 73% G/E rating. The crop is rated right in line with last year at this point.
It has not been a perfect growing season for corn and soybeans in the United States, but conditions have been favorable enough for market analysts and traders to expect big numbers from USDA production report tomorrow. It is uncommon that the trade makes an incorrectly large yield guess in August, though some of their heaviest estimates in recent years actually turned out too low.
Analysts see the U.S. corn yield at 180.5 bushels per acre (bpa) and the soybean yield at 51.2 bpa, which would be the highest and second-highest yields, respectively, for USDA to print in August. The previous largest USDA August forecasts were 178.4 bpa for corn and 51.6 bpa for soybeans, both in 2018. Analysts have under-guessed both corn and soybean yield in August for five years in a row now. USDA’s Farm Service Agency will publish the first batch of acreage registration data on Wednesday, and analysts look closely at these numbers when there are a lot of acreage shifts between the March intentions and June planting surveys as was seen this year.
Elsewhere, flooding in China this growing season has destroyed around 13 million acres of farmland in China, destroying $1.7 billion worth of crops and $19 billion worth of infrastructure, according to a report from CNN. The flooding came just as rice was ready to harvest. The situation has forced the Chinese government to release stocks and could lead to greater imports of U.S. food products.
China imposed sanctions on 11 Americans, including six lawmakers, for “behaving badly on Hong Kong-related issues." Sens. Marco Rubio and Ted Cruz are among those called out by the country. This come days after the US imposed sanctions of its own related to China’s new restrictive national security law in Hong Kong. It’s a familiar back-and-forth that signals another wave of tensions between the two countries. Sure enough, China is also stepping up military drills around East Asia, just as US Health and Human Services Secretary Alex Azar is visiting the self-governing island of Taiwan. A Chinese Foreign Ministry spokesperson said Azar’s visit is "a serious breach" of US commitments on Taiwan, which Beijing regards as Chinese territory. Beijing appears to be trying to find a balance between sounding tough on the U.S. and avoiding triggering detrimental action by President Donald Trump. High-level U.S.-China talks are set for Saturday to discuss the Phase 1 trade deal.
Global stocks are rising after Russian President Vladimir Putin announced his nation has approved a Covid-19 vaccine. While that raised concerns that the country is rushing the process for political purposes, stocks are moving higher. Putin’s announcement became essentially a claim of victory in the global race for a vaccine, despite the absence of published information about any late-phase testing.
The dollar is weaker and crude oil prices are moving higher on the vaccine news. Gold is sharply lower. The outside markets will provide underlying support to the grain markets heading into the more important supply and demand data on Wednesday and U.S.-China trade talks on Saturday.
Corn: December corn pushed up to the highest in five sessions overnight and backed off near midrange at the break. Key support remains at $3.20 with short-term resistance at $3.30 and strong resistance at $3.43 ¾. It was a good week for corn export loadings last week. USDA reported an above average volume, with 1.15 MM shipped, including four cargoes to China. Gulf basis levels improved 2 to 3 cents on Monday.
Soybeans: November beans pushed up near Monday’s high at $8.75 3/4 but failed to clear it. Prices fell back to unchanged at the break. Watch meal’s performance this week after prices fell to new contract lows on Monday and closed above Friday’s session high, forming a key reversal. Follow-through strength is needed to put a floor under both meal and soybean prices.
Wheat: Egypt is back in the market today, with the state-buying agency issuing a tender for an unspecified volume of wheat for delivery between by Oct. 5. Russian and Ukraine wheat are still likely to be the most competitive origin in today’s tender. Ukraine’s economy minister stuck with his forecast for Ukraine to ship 17.2 MMT of wheat in 2020-21. Most expect the 2020 crop to come in between 25 MMT and 27 MMT, down from last year’s 28.3 MMT crop. The Rosario Board of Trade said yesterday that as much as 500,000 hectares of Argentine planted wheat is in “poor to very poor” condition following a prolonged dry spell in the Pampas crop region. The report states that rain is desperately needed within the next two weeks in order to prevent significant reductions in yield potential.
Cattle: Cattle futures settled near session highs yesterday, with the market uncovering support on an early move to the downside. Traders are optimistic the cash market will continue to strengthen, as indicated by futures’ premiums to last week’s average cash price of $101.34. Choice and Select boxed beef values strengthened $1.73 and $1.18, respectively, on Monday, but movement was light at 108 loads. If higher beef prices continue to hold back movement, it could bring the cattle market’s rally to a halt.
Hogs: Lean hog futures posted strong gains to start the week, with nearby futures jumping $1.775 to $2.85 to set a positive tone. A high-range close points to follow-through buying today. Additional strength would increase the evidence of a cyclical bottom in place. Cash hog bids climbed 24 cents on Monday, with the eastern Corn Belt leading gains. However, the pork cutout value fell $1.86 to start the week, but softer prices did encourage strong movement. Slaughter rose to 482,000 head on Monday, up from 456,000 head a year ago. China announced it will auction another 10,000 MT of frozen pork from its state reserves on Aug. 14. Prior to this week’s auction, the country had already auctioned off at least 450,000 MT from its reserves this calendar year to ease tight supplies of pork in the wake of an outbreak of African swine fever. Nonetheless, WH Group, which owns Smithfield Foods, expects China will likely import less pork from the U.S. in the second half of 2020 as the pandemic has pushed up prices, according to Guao Lijun, chief financial officer at China’s WH Group. In contrast, the U.S. Meat Export Federation said U.S. exports of both pork and beef are likely to accelerate again the second half of the year.
Wheat: Down 1 to 3 cents
GENERAL COMMENTS: Corn and soybean trading was quiet overnight with rally attempts limited amid generally favorable weather forecasts and rising U.S.-China trade tensions ahead of the Aug. 15 meetings on the Phase 1 trade agreement.
Soybeans should get a boost at the reopening this morning after USDA announced new sales to China for a fourth straight session and a new sale to unknown destinations. USDA’s daily export sales reporting program announced private exporters sold 324,000 metric tons (MT) to China for new-crop delivery and another 264,000 MT sold to China for new-crop delivery were received during the reporting period to push totals above levels that require reporting. That followed 774,000 MT announced sold to China the last three days of last week. USDA also reported 111,000 MT of beans sold to unknow destinations for new-crop delivery.
The USDA report is out on Wednesday, with average guesses for bean yield and stocks looking low, and average guesses for corn stocks looking high. U.S. corn and soybeans have mostly enjoyed good weather during this growing season, and the forecast for the next couple of weeks is nonthreatening. The average trade guess for soybean yield is 51.2 bushels per acre (bpa), just 0.7 bpa off the record, and that is seen sending next year’s carryout to 524 million bushels, up 23% from the July peg. Rising supplies are also a concern for wheat traders, as USDA is expected to slightly increase U.S. stocks. World ending stocks are seen falling from the July forecast, but they would still reach record levels by mid-2021. The market trends are down, along with the seasonal trends.
The weekly CFTC Commitments of Traders Report on Friday showed somewhat smaller net selling in the corn and wheat than expected, and somewhat larger net selling in the beans than anticipated. Funds were net short 172,820 corn futures and options as of Aug. 4, up nearly 30,000 contracts. In Soybeans funds were net sellers of almost 18,000 contracts, reducing the net-long position to 44,219 futures and options. Funds sold 521 contracts in SRW wheat, trimming the net-short position to 1,178 contracts. Funds raised bearish bets in HRW wheat futures and options to 25,811 contracts through Aug. 4 from 19,026 a week earlier. They also upped their spring wheat short to 22,000 contracts from 21,125 in the prior week, the sixth consecutive week of net selling.
Rain over the weekend was most significant in the Upper Midwest and parts of Missouri, with a small area from central Nebraska to interior southeastern South Dakota also receiving around an inch of rain, according to World Weather Inc. “Net drying occurred in most other areas, with temperatures mostly seasonable in the Midwest, Delta and southeastern states and a little warmer than usual in the Plains.” Over the next two weeks, widely varying amounts of rain are expected for most crop areas east of the Rocky Mountains. The forecaster says rains should be enough to help slow drying across the region, with temperatures expected to be seasonable with a slight cooler bias. But long-term dryness will remain in Iowa.
Major U.S. stock index futures edged higher overnight as investors looked to executive orders from President Donald Trump over the weekend to support the economy. European equities were in the green after shares of energy majors rose as crude prices gained, buoyed by hopes of rising demand. Asian shares ended mostly higher, supported by an improvement in Chinese factory data. The dollar index was up as U.S.-China tensions escalated, while spot gold prices dipped.
Lawmakers in Washington from both sides of the aisle criticized the four executive actions announced by President Trump on Saturday that would defer payroll tax and continue expanded unemployment benefits. Trump made the move in response to the failure of Republicans and Democrats to come to an agreement on a new stimulus package after the deadline for talks passed on Friday. While both sides remain trillions of dollars apart on the size of the package, House Speaker Nancy Pelosi said she hopes talks will resume soon, while Treasury Secretary Steven Mnuchin said he would listen to any Democrat proposal.
Meanwhile, China said it will sanction 11 Americans in retaliation for the U.S. move on Friday which saw a similar number of Chinese officials, including Hong Kong Chief Executive Carrie Lam, sanctioned over their role in curtailing freedoms in the city. No members of the Trump administration are on todays list announced by China. There was further evidence of a crackdown in Hong Kong this morning when police raided the offices of the largest pro-democracy paper there, arresting media tycoon Jimmy Lai.
It is probably unlikely that the review of the Phase 1 deal due this week, as directed by the text of the accord, will command the same attention that it would in a non-Covid world. However, it could well be a very important moment for markets. Should the U.S. look through Chinas failure to hit import targets for the last six months, relying on the excuse of the coronavirus shutdown, and allow the deal to continue as is, it would provide some relief for investors growing increasingly concerned about the rapidly rising tensions between the worlds two largest economies. In the unlikely event that the review leads to a walking back of the agreement, we may find that trade issues will once again dominate market moves. Yet senior Chinese officials — including Foreign Minister Wang Yi — have made conciliatory statements, urging Washington last week to “reject decoupling.”
The markets seem to be more focused on potential new Covid-19 vaccine breakthrough than the rising case totals. The United States has now reported more than 5 million cases of Covid-19. To put that in perspective, it took the country 99 days to reach 1 million cases, but it only took 17 days for cases to rise from 4 million to 5 million. More than 97,000 children tested positive for coronavirus in the last two weeks of July, according to a new medical report. That’s a 40% increase in child cases across the states and cities that were studied. Meanwhile, Brazil has logged at least 3 million cases and has passed 100,000 coronavirus deaths, and Mexico is inching toward 500,000 cases.
Corn: December corn appeared to complete small post-breakout pauses. Closing below this week’s lows could lead to quick declines. Prices were stuck in a narrow 2-cent range overnight, holding just above new-contract lows last week.
Soybeans: November beans erased small gains overnight and fell to a new swing lower ahead of the morning break. Soybean meal all but reaffirmed a major bear market last week. Low weekly closes suggest soybeans will remain under pressure without some bullish surprises in Wednesday’s USDA crop production and world supply and demand updates. Bulls likely need to make a stand this week.
Wheat: All three wheat markets closed below significant barriers last week and continue under pressure to begin the new trading week. Markets could post minor pauses but saves seem unlikely. Australia experienced widespread rains increasing the confidence that Australia will have a normal crop after years of drought. IKAR has once again raised its production estimate for Russian wheat production, now increasing it to 81Mt from its previous forecast of 79.5Mt, again, a reflection of increasing expectations of improving yields in Russia while also a reflection of the recent upward revision to planted area. Following the news last week that Pakistan intends to import 1.5 MMT of wheat on concerns over food security due to the coronavirus pandemic and invading locust swarms, the nation issued a tender this morning for the full 1.5 MMT. The Food Security Minister said that the majority of the purchases would come from Russia.
Cattle: Friday’s losses in the cattle complex were limited enough to be consistent with pausing in overall uptrends. It would be positive for strength to return on Monday – and then sustain for the week to renew the larger uptrend. Cash cattle prices did move higher over the past week, but futures are already at a premium to the cash market. Boxed beef values strengthened Friday amid light to moderate movement. Choice gained 81 cents and Select rose 74 cents. The market continues to monitor the product market as firmer prices may slow movement. Slaughter was estimated at 633,000 head, down 5,000 head from a week earlier and 14,000 smaller than a year ago. Dressed weights rose 2 lbs. and are 22 lbs. above a year ago.
Hogs: Lean hog futures ended last week on a strong note, signaling the market may have put in a low. A move above the July high and the 100-day moving average would add to such ideas and would likely spur some additional buying. Adding to the positive tone, cash hog bids firmed an average of 17 cents nationally on Friday, with higher bids in the eastern Corn Belt offsetting softer prices to the west. And the pork cutout value climbed another $1.13 on Friday, with loins leading gains. Movement was down from recent tallies but still solid at 341.72 loads. Europe’s largest pork exporter, Danish Crown, says it will close its Ringsted facility for at least a week after a rise in the number of Covid-19 cases.
GENERAL COMMENTS: Corn and soybeans overnight were limping into the weekend amid generally favorable U.S. weather and uncertainty about U.S.-China relations. Next week is big with USDA releasing its first survey-based corn and soybean crop estimates and update U.S. wheat production and world supply & demand balance sheets on Aug. 12. On Aug. 15, U.S. and Chinese officials will hold high-level talks, which will include a focus on Chinese commitments to purchase U.S. goods. Wheat is erasing overnight gains this morning after touching a one-month low in SRW futures and new contract lows in HRW and spring wheat contract yesterday. One trade estimate calling for a record Canadian wheat crop, rising forecasts for Russias harvest, improving conditions in Australia and good early signs for the U.S. spring wheat harvest were underscoring ample global supplies.
Soybeans should get a boost at the reopening this morning after USDA announced new sales to China for a third straight session. USDA’s daily export sales reporting program announced private exporters sold 456,000 metric tons (MT) for new-crop delivery. That follows Thursday’s announcement of 192,000 MT and Wednesday’s sales announcement of 126,000 MT to China.
The wire service polls for next week’s USDA reports are out. The trade is looking for U.S. corn production to rise on average about 170 million bu. to 15.17 billion bu. from July’s forecast. Soybean production is seen rising by an average of 123 million bu. to 4.258 billion bu. in next week’s report. Both U.S. and world corn and soybean ending stocks in the 2020-21 seasons are seen rising.
Weather forecasts remain mostly non-threatening outside of Iowa. Rains remain light today but will pick up Sunday into next week, moving from north to southeast into next weekend, with the 11-15-day outlook still dry. Temps will be heating up this weekend, remaining hot through mid-August. Temperatures will be seasonably warm and scattered showers and thunderstorms will continue to occur with resulting rainfall varying greatly, according to World Weather Inc. The majority of the precipitation will be light, but enough to hold back temperatures and to slow down net drying across the region. The ridge will become more stable and more significant late next week through August 20 at which time a more stressful environment may evolve for those areas that failed to get good rain in this first week of the outlook, the forecast said this morning.
China urges the United States to strengthen cooperation to create favorable conditions for the implementation of the phase one trade deal, said its top diplomat Yang Jiechi on Friday. Yang, in an essay published on Chinas foreign ministry website, also urged the United States to stop "bullying" Chinese firms and to create a fair, open, non-discriminatory environment for them, in an apparent reference to an impending U.S. ban on transactions with the Chinese owners of messaging app WeChat and video-sharing app TikTok. Yang reiterated Chinas call for all sectors from both countries to engage in dialogue, adding that the door for communication "has always been fully open".
U.S. Health and Human Services Secretary Alex Azar will lead a delegation to Taiwan on Sunday to meet with senior Taiwanese officials in a rare high-profile visit to the island. Planned discussions will focus on the global response to the Covid-19 pandemic, but the visit comes as tensions between Washington and Beijing have rapidly escalated. It is expected to provoke a strong reaction from China as China considers Taiwan to be a part of its national territory, and it has blocked the island from joining several international bodies.
Meanwhile, Chinas global imports of major commodities including crude oil, iron ore and soybeans all surged from a year earlier with the country snapping up raw materials as its economy revives following a hit from the coronavirus pandemic. The government said copper imports surged nearly 82%, oil products rose 41.5%, crude oil gained 25%, iron ore imports jumped 24%, coal shipments rebounded 21% and soybean imports rebounded nearly 17%.
Chinese customs data shows the country imported 10.09 MMT of soybeans during July, a 16.9% jump from 8.63 MMT imported in July 2019 but a 9.6% decline from the record-breaking 11.16 MMT of soybeans it imported in June. Brazil was the supplier of much of these soybeans as a big crop and a depressed currency made its beans relatively inexpensive. For the first seven months of the year, China has brought in 55.14 MMT of soybeans, a 17.7% increase from last year at this time.
A top U.S. biofuel industry trade group said it has cut lobbying spending as the coronavirus pandemic has slammed members eager to press demands with President Donald Trump, who hopes to win the corn-producing state Iowa in November. The Renewable Fuels Association spent $339,676 toward lobbying efforts during the second quarter, according to a U.S. Senate database that tracks lobbying disclosures. That was down 12% from the same time last year and 4% from the prior quarter. Reduced clout could complicate the industrys efforts to secure changes to U.S. biofuel policy that producers say would shore up demand for corn-based ethanol, but which face strong opposition from oil refiners. "This is a critical time," said one industry source, who asked to remain anonymous. "The list of things before us is long and people are hemorrhaging money, so youve got to do a lot more with less."
French farmers have almost wrapped up this years wheat harvest, data from farm office FranceAgriMer showed on Friday, after hot, dry weather allowed the rapid gathering in of what is expected to be a small crop. Harvest was estimated at 99% complete by Aug. 3 compared with 90% a week earlier. Soft wheat production is expected to drop by around a quarter compared with last year to its lowest since 2016, another year marked by adverse growing weather. Spring barley harvesting was 83% complete by Aug. 3, up from 56% a week earlier but running six days behind the average pace of the past five years, the office said. Corn conditions in France declined again, with 74% of crops rated “good or excellent” against 77% in the previous week when conditions also fell 3 points. July was the driest in six decades and heat is returning today.
The American economy gained 1.8 million jobs last month, even as the coronavirus surged in many parts of the country and reintroduced restrictions caused some businesses to close for a second time. Job growth topped the 1.5 million average increase expected by Wall St. economists. Still, the increase reported Friday by the Labor Department was well below the 4.8 million jump in jobs in June and a sign that momentum is slowing after a burst of economic activity in late spring, increasing the importance of a new government aid package.
However, there has been no progress on agreeing a new stimulus plan for the U.S. economy, with talks now on the brink of collapse. Treasury Secretary Steven Mnuchin said that the White House and Democratic leaders remain "very, very far apart on significant issues." House Speaker Nancy Pelosi called a proposal from the Trump administration "anorexic." It is unclear if the two sides will meet again today. President Trump said yesterday that he will sign executive orders extending enhanced unemployment benefits and imposing a payroll tax holiday if no agreement on a broader package is reached.
Still, U.S. stock index futures pared some overnight declines, the Dollar Index pared its earlier gains and U.S. Treasury yields inched higher after the report. Golds record-breaking rally is pausing on Friday with prices slightly lower but off session lows after the report. Fears over a worsening pandemic kept bullion on track for its longest streak of weekly gains in about a decade. The Dollar Index rebounded from a two-year low after President Donald Trumps decision to ban U.S. transactions with two popular Chinese apps weighed on risk sentiment. Gold has surged more than 35% this year amid surging COVID-19 cases that have battered economies and prompted unprecedented global stimulus measures.
Oil prices are also paring overnight losses with prices down about a dime at $41.85 this morning. Still, oil prices could surpass $50 per barrel in the second half of 2021, research group IHS Markit projected Thursday, as the market faces a “delicate pivot point” with demand recovering, supply coming back, but the trajectory of the coronavirus unknown. IHS Markit upgraded its price outlook for Brent crude, the international benchmark, to an average price of $42.35 per barrel in 2020 and $49.25 per barrel in 2021—up $7.09 per barrel and $5.25 per barrel, respectively, from its May forecast. Prices have stabilized in recent months above $40 per barrel, but many producers require prices to rise at least $50 per barrel to make a profit.
Corn: December corn was stuck in a 1 1/4-cent range overnight, failing to build on the two-day rebound off new contract lows on Tuesday. Downside breakouts in wheat and the small pauses below broken support in corn futures are negative technical signals. Low weekly closes would further suggest corn is poised for further downside momentum into harvest. Oil and product markets are also at key inflection points that may have carryover impact on the corn markets.
Soybeans: November beans opened steady to fractionally higher then fell to new 3 1/2-week lows this morning. After another Chinese sale announcement this morning, the close tonight will be closely scrutinized. Soybean meal closed solidly below key support, but not below the prior lows. Closing below the July low would be a negative technical signal for both meal and soybeans.
Wheat: Futures are barely holding onto grains after HRW and spring wheat closed solidly below key support – and SRW futures are challenging a key support. Solid Friday losses could reopen major downside risks. The World Food Program announced plans to import wheat flour and grains for bakeries and mills to help protect against food shortages across Lebanon after a blast wrecked its main port in Beirut, the United Nations agency said on Friday.
Cattle: Futures popped out to new swing highs and closed lower on Thursday, forming a downside reversal. However, without solid Friday losses, it is likely the cattle complex is just pausing. It may be an important close tonight. Cash cattle prices climbed this week to $100 or higher, up $2 to $3. August futures are trading right in line with this week’s cash action ahead of the delivery period next week. October live cattle premium to the cash market signals traders expect cash strength to continue. Choice and Select boxed beef values strengthened $1.09 and $1.19, respectively, on Thursday, with movement solid at 143 loads. Both grades have moved higher over the past week, which helped packer bids firm.
Hogs: Futures closed mixed Thursday on disappointing weekly U.S. pork export sales of 30,300 MT for the week ending July 30, which was a 14% drop from the prior four-week average. China accounted for 5,600 MT of those purchases, but that tally included cancellations of 3,000 MT. On a more encouraging note, the pork cutout value surged $3.76 on Thursday amid lighter movement of 324.37 loads. Hams, bellies and butts climbed roughly $6 to $9 yesterday. Cash hog bids slipped 54 cents on Thursday, with declines in the eastern Corn Belt offsetting gains in the western Corn Belt.
Soybeans: Steady-up a penny
Wheat: Down 2 cents to up 1 cent
GENERAL COMMENTS: Corn and soybeans are little changed waiting for next week’s first survey-based crop production forecasts on Aug. 12. Prices have dropped sharply earlier this week as analysts and traders are raising yield projections and expecting USDA to do the same. Canadian farm service company, Farmlink Marketing Solutions yesterday estimated the country’s wheat harvest for 2020 at 39 MMT, above the 2013 record of 37.6 MMT, with canola seen strong at 20.2 MMT as well, up from 18.6 MMT in 2019 following a tour of western Canada crops.
We had some pop-up showers in parts of Iowa overnight but generally this week is dry for much of the Midwest. Temperatures start to warm up today and continue through the weekend, reaching above-normal levels next week. Forecast models are diverging on rain amounts next week and that will keep some support under the market as Iowa and a few other dry areas may miss needed rains.
This morning’s weekly export sales data for the week ended July 30 showed weekly corn, soybean and wheat sales at or above the top end of trade estimates, and included both already announced daily sales of corn and soybeans to China and new wheat and soybean oil sales to China. Soybeans sold for new-crop delivery rose to 1.405 MMT last week, topping trade estimates with China and Mexico the top buyers. Old-crop soybean sales rose 72% to 345,200 MT from a week earlier but were down 22% from the prior four-week average. Soymeal sales for old- and new-crop were large but incline with trade estimates. Corn sold for new-crop delivery were 2.6 MMT, including 1.937 MMT already announced sold to China in the daily reporting program. That was at the top of trade estimates. New sales of wheat were 605,500 MT, up 2% from the prior four-week average. China was the top buyer, purchasing 85,000 MT. Brazil also bought 64,500 MT.
USDA’s daily export sales reporting program announced private exporters sold 126,000 metric tons (MT) of soybeans to China for new-crop delivery. That follows yesterday’s announcement of 192,000 MT sold to China. The sales may add light support to the market on the reopening but more sales are needed to offset the rising U.S. crop outlook.
The number of Americans seeking unemployment benefits fell last week, but remained significantly high, suggesting the labor market was stalling as the country battles a resurgence in new COVID-19 cases that is threatening a budding economic recovery. Initial claims for state unemployment benefits totaled a seasonally adjusted 1.186 million for the week ended Aug. 1, compared with 1.435 million in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 1.415 million applications in the latest week. Tomorrow mornings employment report may show a 1.5 million increase in nonfarm payrolls in July, but forecasts range from a 600,000 decline to a 3.2 million gain.
Top congressional Democrats and White House officials appeared to harden their stances on new coronavirus relief legislation on Wednesday, as negotiations headed toward an end-of-week deadline with no sign of an agreement. Democrats are demanding more concessions for a new pandemic relief package if one is to be approved by Friday. Republicans have offered $400 per week in supplemental unemployment benefits through Dec. 14, but Democrats rejected that in favor of $600 per week. The White House has put $200 billion in state and local aid on the table, but that is far less than the $1 trillion Democrats are seeking. Meanwhile, unemployment benefits are expiring, and job losses are mounting as the recovery stalls and small businesses near the end of their rope.
Chicago Fed President Charles Evans said the U.S. economy would face a much steeper slowdown should Congress fail to at least partially extend more generous unemployment benefits and take broader fiscal policy action. “Trouble is brewing with the expiration of these relief policies,” Mr. Evans told reporters. “If we go very long without somehow addressing the reduction and evaporation of that support, I think it’s going to show up in lower aggregate demand. And that would be very costly for the economy.”
Investors should consider the risk of a successful coronavirus vaccine unsettling markets by sparking a sell-off in bonds and rotation out of technology into cyclical stocks, warned Goldman Sachs Group Inc. Approval of a vaccine could “challenge market assumptions both about cyclicality and about eternally negative real rates,” the team wrote, adding such a scenario may support steeper yield curves, traditional cyclicals and banks, while challenging the leadership of technology stocks.
Meanwhile, U.S. regulators have assured scientists that political pressure will not determine when a coronavirus vaccine is approved even as the White House hopes to have one ready ahead of the November presidential election, the countrys leading infectious diseases expert Anthony Fauci said on Wednesday.
Corn: December corn has traded in a narrow range of 2 cents on both sides of unchanged after hitting new contract lows on Tuesday. Look for more choppy, narrow trading ranges. Daily momentum is oversold and suggesting a pause. China once more sold all the 3.992 MMT of reserve corn put up for auction this week at an average selling price of 2,005 yuan ($288.73) per metric ton, the country’s trade center reported. The average sales price was down 32 yuan (1.6%) from last week. Over the past 11 weeks of auctions, China has cleared all the supplies it has offered, adding to ideas the country is dealing with a shortfall and could increase purchases of corn from the U.S.
Soybeans: November beans opened lower last night and pushed to the lowest since July 14 before recovering into the break this morning. The export sales data this morning will provide a floor under prices as the recent weakness is spurring some increase in demand.
Wheat: Futures are struggling as more export demand is needed because there are not enough global production issues to change the general market trend amid record world ending stocks forecasts. Egypt bought 410,000 MT of Russian and Ukrainian wheat yesterday at an average price $4 below last week. The market is also pressured by reports of rising yield potential in Canada.
Cattle: Futures were able to bounce back from early session decline to close above opening ranges and mostly higher for the day. That momentum is positive for this morning. Wholesale beef was mixed Wednesday with Choice cutouts falling 67 cents and Choice rising 37 cents on good sales. Cash cattle prices are generally $1 to $3 higher this week. The weekly export sales report for the week ended July 30 showed beef sales fell 35% below the prior four-week average with no new sales reported to China. Shipments also slowed 8% below the four-week average last week.
Hogs: Futures were mostly higher Wednesday as the average negotiated cash hog prices rose $2.68 to the highest since mid-April. Rising Chinese and Brazilian hog prices are providing strong support to the U.S. and Canadian markets. Pork cutouts rose $1.54 on modest sales with most of the strength tied to gains in hams and bellies. Market-ready supplies remain ample. Pork sales last week fell 23% from the prior week and were 14% below the four-week average. China was a net buyer of 5,600 MT after cancelling prior purchases for 3,000 MT. Weekly shipments jumped 6% above the prior four-week average with Mexico and China the top two destinations.
Corn: Up 1 to 2 cents
Soybeans: Up 1 to 3 cents
Wheat: Up 2 to 4 cents
GENERAL COMMENTS: Ccorn and soybean futures are inching higher this morning as both the markets recovered from sharp declines yesterday, although expectations of bumper U.S. production curbed gains. Wheat is heading for the first gain in three sessions as Egypts General Authority for Supply Commodities announced a tender to buy an unspecified amount of wheat from global suppliers for shipment in September. U.S. prices are not competitive versus Russian and Ukraine offers. Traders are also looking for some wheat buying from Lebanon shortly after the explosions in the Beirut port yesterday damaged the grain storage facility that held Lebanon’s wheat reserves.
A weaker dollar, gold trading above $2,000 an ounce and stronger oil prices are supportive for grain price recoveries this morning.
Corn futures plunged to the lowest since June 29, setting new contract lows in most contracts. Soybeans are bouncing back from the lowest since July 15. USDAs weekly crop conditions report on Monday afternoon rated 72% of the U.S. corn crop and 73% of the soybean crop as good-to-excellent, bolstering expectations for big yields.
Patchy rains in U.S. Plains during the past 24 hours with heavy rains in Oklahoma this morning. There will be showers in parts of the northwestern Midwest today with more forecast for the weekend. Current driest spots in Midwest include north and central Iowa, far southeast South Dakota, far southwest Minnesota and east-central Nebraska, that coverage about 10% to 15% U.S. corn and soybean growing regions, according to Commodity Weather Group. Showers next week will prevent expansion of the dry spots, but Iowa may be short-changed. Warmer temperatures will develop after this week’s cool reading. However, the 6- to 10-day outlook is less hot in the Northern Plains and northwest Midwest. Rains may aid late growth in Southeast with traders watching for more tropical storm development potential in August that could cause problems.
USDA’s daily export sales reporting program announced private exporters sold 192,000 metric tons (MT) of soybeans to China for new-crop delivery. The sales may add light support to the market on the reopening but more sales are needed to offset the rising U.S. crop outlook.
The United States and China have agreed to hold high-level talks on Aug. 15 with the aim of assessing compliance by China with respect to a bilateral trade agreement signed earlier in 2020, the Wall Street Journal reported on Tuesday, citing sources. The talks will include U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He, the newspaper reported, adding that they will focus on the phase 1 deal that called for Chinas commitment to boost U.S. imports by $200 billion over two years.
Crop estimates for Brazil’s new-crop outlook will cap corn and soybean rallies. The consultancy Agroconsult projects Brazil’s 2020-21 soybean crop at a record 132.6 MMT, with the firm calling for planted acreage to rise more than 1 million hectares to 37.9 million hectares (93.7 million acres). Agroconsult expects Brazil to export 80 MMT of soybeans in 2020, with even higher shipments in 2021 thanks to strong demand from China. The consultancy expects near-steady full-season corn plantings in 2020, but production is expected to climb from 27.1 MMT in 2019-20 to 28.4 MMT in 2020-21. Agroconsult expects safrinha corn acres to climb 5%, pushing the crop to a record 81.9 MMT. Agroconsult’s full-season corn crop projection of 10.3 MMT would represent a 9.0% spike from the current season.
Brazil will export 6.72 MMT of soybeans and 6.32 MMT of corn in August, according to the countrys National Grains Exporter Association (ANEC) in its first estimate for the month. That would be a 33% increase for soybeans over the same month last year. Corn exports would also be 33% higher, although less than projected earlier by the association. July soybean exports were 8.02 MMT, ANEC said, below a projected 8.4 MMT. Corn exports in July were 5.07 MMT, also below an earlier projection of 5.4 MMT.
The U.S. dollar is weaker against many major currencies and could fall much further, if the U.S. Congress fails to reach a compromise on unemployment benefits this week. The current scheme ended July 31 and so far, lawmakers have been unable to agree an extension or a new package. Speaker of the House Nancy Pelosi has already cast doubt on an agreement this week before the Senate goes to summer recess, although that could be delayed by a few days if needed to get an agreement over the line. However, if no agreement has been reached, and a compromise still seems unlikely come Friday, the dollar could take another hit, especially if impending jobs data comes in worse than expected in Friday’s monthly update.
U.S. factory orders rose 6.2% in June, more than expected and boosted by a surge in demand for motor vehicles, after gaining 7.7% in May, the Commerce Department reported Tuesday. However, factory orders overall remain well below their February level, and Junes reading was 10.1% below June 2019s level.
The global death toll from the coronavirus surpassed 700,000 on Wednesday, according to a Reuters tally, with the United States, Brazil, India and Mexico leading the rise in fatalities. Nearly 5,900 people are dying every 24 hours from COVID-19 on average, according to Reuters calculations based on data from the past two weeks. That equates to 247 people per hour, or one person every 15 seconds. President Donald Trump said the coronavirus outbreak is as under control as it can get in the United States, where more than 155,000 people have died amid a patchy response to the public health crisis that has failed to stem a rise in cases. Even in parts of the world that had appeared to have curbed the spread of the virus, countries have recently seen single-day records in new cases, signaling the battle is far from over. Australia, Japan, Hong Kong, Bolivia, Sudan, Ethiopia, Bulgaria, Belgium, Uzbekistan and Israel all recently had record increases in cases.
Corn: December corn fell to a new contract low at $3.20 yesterday. Corn broke key barriers in multiple contracts. Yet, likely last lines in the sand are 5 to 8 cents lower than yesterday’s lows. Bulls are severely wounded, but not quite put away. Demand perked up on lower prices with the Korea Feed Association buying 63,000 MT for November delivery and South Korea’s NOFI bought 69,000 MT for December delivery. South Korea’s KOCOPIA passed on a tender for 60,000 MT.
Soybeans: November beans opened higher last night but have slipped back near the session low at the morning break. Tuesday’s low at $8.79 ¼ is key short-term support with better support at the July lows at $8.71 1/2. December meal held key support yesterday but a close below Tuesday’s low at $289.40 may cause pressure to grow.
Wheat: Sustaining closes below recent lows are key benchmarks that could opening up increased downside risks. Both HRW and spring wheat futures fell to new contract lows on Tuesday. Paris wheat is slightly higher this morning and cash premiums are firm with French, German and Baltic supported by slow producer selling and firm euro against the dollar. Germany will likely produce a 20.23 MMT wheat crop in 2020, the country’s statistics office forecast today. That would be a 12% slide from year-ago and is quite a bit lighter than the 22.46 MMT projected by Germany’s association of farm cooperatives. Frances farm ministry on Wednesday lowered its estimate of this years soft wheat harvest to 29.71 MMT from an initial forecast of 31.31 million last month. That was 24.9% below last years bumper harvest and also 15.9% lower than the average of the past five years, Wheat merchants who had committed to sell to Asian millers are now facing hefty losses after an unexpected spike in Russian and Ukrainian grain prices as farmers held on to their supplies, according to Reuters. Russian wheat with 11.5% protein was quoted around $236 per MT, including cost and freight (C&F), this week to Indonesia, up from sales committed at between $217 and $222 a MT in the last few months for August shipment. Russian wheat export prices eased last week after three weeks of gains, under pressure from the new crop harvest and a weakening ruble against the dollar, IKAR agriculture consultancy said in a note on Monday. But supplies remain tight in some areas and a few buyers need grain urgently to load approaching vessels.
Cattle: Small setbacks are welcomed in the cattle complex as long as the market pauses are limited to a few days. These pauses are healthy and common action in the cattle market. Live cattle saw light pressure for much of the session yesterday, with traders chipping away some of the premium futures hold to the cash market. Another week of steady to higher cash trade is expected, with some firmer bids reported in the south yesterday. So far, there has been some light trade in Kansas at $100 and in Texas at $99, up $2 to $3 from the bulk of trade last week in these states. Boxed beef movement improved notably on Tuesday, with 160 loads changing hands on mixed prices.
Hogs: Futures ended mixed after testing support in early trading. Today’s closed could be an important clue to market direction amid hints that cash hog prices are bottoming. However, the market typically softens seasonally during the third and fourth quarter of the year and big backlogs of market-ready hogs persist. Cash hog bids dropped $1.52 nationally yesterday, with the eastern Corn Belt leading the decline. The pork cutout value fell $1.28 on Tuesday but sales surged to 465.94 loads. Export sales on Thursday will be closely monitored to gauge Chinese demand. China announced it will auction 20,000 MT of frozen pork from its state reserves on Aug. 7. The country has sold well over 400,000 MT at auctions this year as it works to ensure adequate domestic supplies of pork.
Corn: Down 2 to 3 cents
Soybeans: Down 3 to 5 cents
Wheat: Down 2 to 5 cents
GENERAL COMMENTS: Soybeans are heading for the first decline in four sessions on stronger U.S. crop ratings that is pushing traders to raise yield and crop forecasts. Corn is set to open near last week’s low and just above contract lows as traders are looking for USDA to raise its production forecast in the Aug. 12 first survey-based estimates. Wheat continues under pressure from lower world prices and better yield report from Europe and Russia than expected earlier this harvest season.
Some underlying support is coming from forecasts for drier and warmer weather into mid-August. Unseasonably cool mornings have occurred across the U.S. Midwest and Great Plains the past two days while a heat wave builds in the western part of the nation. Tropical Storm Isaias will race into Canada from the middle Atlantic Coast States today and once the storm clears out of the continent the cool air will shift to the Atlantic Coast and the heat will build into the Plains and western Corn Belt. The warming trend has some concerned that August will be the hot, dry, month. But ridge of high pressure and associated warmer weather is not expected to last much more than ten days. The upcoming warming may be of short duration and one that may benefit late-season crops more than harm them because recent rainfall, while sporadic across the Midwest, may help to minimize the number of areas suffering from dryness.
On Monday, USDA again surprised with an unusual increase in crop condition ratings, adding another percentage point to the “good” category to push the overall “good” to “excellent” (G/E) rating up to 73%. Analysts surveyed by Reuters on average expected a steady 72% rating. Recent cooler weather and some timely rains did the U.S. soybean crop some good. Soybeans have only rated higher for the date in 1994 and 1992 since data began in 1986. Both years, USDA raised its July forecast by more than 5.3% in the August update and further increased yields into the final estimates in January. USDA again rated 72% of the U.S. corn crop in G/E and 7% “poor” to “very poor,” unchanged from last week and right in line with expectations.
StoneX, the commodity brokerage formerly known as INTL FCStone projected the U.S. corn crop will total 15.320 billion bu. on an average yield estimate of 182.4 bu. per acre. The firm projects Iowa will average 202 bu. per acre, with Illinois at 212 bu. per acre and Nebraska at 196 bu. per acre. StoneX’s survey work and other factors points to a U.S. soybean crop of 4.496 billion bu. on an average yield of 54.2 bu. per acre. That includes yield projections of 68 bu. per acre for Illinois, 60 bu. per acre for Iowa and 55 bu. per acre for Minnesota. These are some big numbers and USDA’s NASS tends to top the firm’s production forecasts.
USDA’s daily export sales reporting program did not announce any new large grain or soybeans sales by private exporters this morning. The lack of new buying is a disappointing for soybeans and not expected for the grain markets.
Brazil exported 10.37 MMT of soybeans during July, which represented a 39.4% surge from the year prior amid continued aggressive Chinese buying, according to government trade data. The country’s corn exports also picked up, though exports of 4.15 MMT were down 29.7% from July 2019. Exporters have had to compete with the livestock sector for corn. Brazil exported 169,200 MT of beef last month, which represented a 27.0% year-over-year jump. Pork exports climbed 46.7% to 90,200 MT. Chicken exports were the outlier, dropping 9.2% from year-ago to 337,500 MT.
Global coronavirus cases surpassed 18 million as the pandemic is now adding a million infections every four days, prompting more lockdowns around the world. The U.K. is looking at all options for tackling flare-ups, following reports that a London-wide lockdown is being considered. Any remaining hope that coronavirus would take a holiday has been all but crushed. At its current pace of about 250,000 or so new cases a day, there could be more than 50 million infections worldwide by the end of 2020. The virus is expected to remain a formidable adversary until a first generation of effective vaccines can be rolled out, which many experts expect in 2021. Wealthy countries are first in line, with about 1.3 billion doses of potential shots secured by the U.S., EU, Britain and Japan.
On Sunday, Bitcoin crossed above $12,000 for the first time since August 2019, before plunging by more than 10% within minutes. The cryptocurrency’s notable moves during two consecutive weekends recall a similar phenomenon in 2019, when outsized gains took place numerous times during Saturday and Sunday trading as the price rose from a few thousand dollars into five-digit range.
Global Covid-19 cases topped 18.2 million as the rate of infection jumped in Germany and Poland. Melbourne, Australia, the nation’s second biggest city faces new strict lockdowns starting Sunday after a record spike in coronavirus cases yesterday. On a more positive note, California and Arizona reported fewer new cases after battling a surge in infections last month. Kosovos Prime Minister was the latest European leader to self-isolate after contracting the disease. Covid-linked deaths in Iran may be triple the official tally, the BBC reported, while experts warn that India hasnt properly recorded fatalities.
Markets are mixed as investors await news on U.S. stimulus plans before the Senate leaves on an extended break Friday. Overnight, the MSCI Asia Pacific Index added 1.7%, while the Japanese Topix gained 2.1%. In Europe, the Stoxx Europe 600 Index fell 0.4%. S&P 500 futures were down, the 10-year Treasury yield was at 0.538% and gold and oil prices were lower.
U.S. stock futures pulled back on Tuesday as President Donald Trumps moves to force China-owned TikTok into a sale of its U.S. operations drew a sharp rebuke from Beijing, ratcheting up tensions as the world slides into a pandemic-fueled recession. Friction between the worlds top two economies took a back seat in the first half of 2020 as the COVID-19 pandemic crushed global growth, and an escalation now would hamper the recovery of some exporters and importers and fan fears of a deeper economic slump. With Microsoft looking to buy short-video app TikToks U.S. operations, Trump said on Monday the U.S. government should get a "substantial portion" of any deal price. On Tuesday, state-backed newspaper China Daily said the country will not accept the "theft" of the technology company.
The July Non-Farm Payrolls report comes out Friday. Economists are looking for the unemployment rate to fall to 10.5% from 11.1% and the creation of 1.5 million new jobs. The recovery is showing signs of slowing with small business hurt the most. Total job postings on a year-over-year basis starting to roll over after peaking in early July. Another way to view this is that job openings are actually at a fairly "normal" level right now compared to trends in previous years. But thats after plunging into such a massive hole during March so you would hope to be seeing a lot more catch up. They aren’t.
Corn: December corn fell to test last week’s low at $3.25 ½ overnight and is just above the contract low at $3.22 on rising U.S. crop forecasts. Meanwhile, Ukraine’s grain traders union UGA hiked its corn production forecast by 2.1 MMT to 38.9 MMT. This also fueled a 2.7 MMT jump in its corn export forecast that now stands at 30.3 MMT. With two months remaining in the marketing year, total U.S. ethanol use stands at 4.017 billion bushels. USDA forecasts total corn use for ethanol production will hit 4.85 billion bu. in 2019-20. To hit that forecast, total corn use would have to hit 833 million bu. for July and August combined, which seems doable based on weekly reports from the Energy Information Administration. We expect USDA to maintain its 4.85 billion bu. ethanol use forecast in its Aug. 12 update.
Soybeans: Soybeans are paring the recent three-day advance. November fell below the 20-day moving average overnight near $8.92. Key support is last week’s low at $8.80 3/4. The U.S. crushed 177.3 million bu. of soybeans during June, which was just a bit lighter than the 177.8 million bu. expected but easily the largest June crush on record. The June crush was down 1.3% from May. Soyoil stocks dropped more than expected to 2.271 billion lbs. at the end of June, which was a 176.6 million lbs. retreat from the month prior as biodiesel usage is stronger than expected. Malaysian palm oil prices rose another 1% overnight on lower production.
Wheat: December SRW wheat are heading for a second straight session, falling to the lowest in almost four weeks on rising Russian crop forecasts. Spring wheat harvest advanced four percentage points over the past week to 5% complete, versus expectations for harvest to reach 8% finished and the five-year average completion rate of 10%. USDA raised the amount of top-rated spring wheat three percentage points, with crop ratings now in line with year-ago levels and pointing to strong yields.
Cattle: After choppy early trading, live and feeder cattle futures closed into new swing highs and near session highs. Buying in August live cattle limited to some degree by its premium to the cash market. Cash cattle traded at an average price of $98.66 last week, up slightly from the week prior and more than $4 below where August live cattle settled on Monday. Boxed beef movement has slowed amid higher prices in recent days, which is a bit concerning. Just 104 loads changed hands yesterday, with Choice climbing $1.40 and Select rising 51 cents. Slaughter was 113,000 head, down from 120,000 head a year ago.
Hogs: Futures slumped Monday but held support with most contracts trading inside of Friday’s wide-ranging higher trade. That suggests some underlying support, but the national average hog prices fell 66 cents yesterday amid abundant supplies. Look for another test of support in early trading. However, the pork cutout value climbed $1.47 to start the week amid solid movement of 393.09 loads. All cuts except hams climbed, with bellies leading to the upside. BLT season is underway. But the pork cutout value is still down several dollars from week-ago levels.
Corn: Up 1/2 cent to 1 1/2 cents
Soybeans: Up 3 to 6 cents
Wheat: Down 4 to 7 cents
GENERAL COMMENTS: It is the first day of August trading with soybeans heading for a third day of gains and corn is trying to hold support tested last week as Chinese buying optimism offsets generally favorable weather. Wheat prices are trading lower, following European futures lower on increasing signs of abundant global supply and slack demand weighed as the COVID-19 crisis continues to cause demand destruction. Meanwhile, there were still no deliveries in the August beans and the commercials stopped the oil again. Tonight’s weekly USDA Crop Progress Report is expected to show little change in already elevated U.S. corn and soybean crop ratings, compared with a seasonal tendency for conditions to decline in early August.
Over the weekend in the US, there were rains over the Ohio River Valley and showers from eastern Nebraska to Minnesota Saturday, and showers around the Great Lakes Sunday. There’s not a lot of rain forecast this week, but also little heat. The weather looks dry and cool this week, with rains in the forecast for next week, but Iowa does not appear to be in line for any significant rains for the next ten days. The big questions for traders are whether the production gains across the eastern and southern Midwest, Delta and Plains offset the developing dryness in parts of Iowa, Nebraska, Minnesota and South Dakota.
USDA’s daily export sales reporting program announced private exporters sold 260,000 MT of soybeans to unknown destinations, with 8,000 MT sold for old-crop delivery and 252,000 MT sold for new-crop delivery. The sales will maintain overnight support in the soybean market. Stepped up Chinese buying of U.S. commodities may help to spur buying by other importers.
China’s soaring corn prices prove fertile ground for speculators, says a Financial Times article. “Corn futures traded in Dalian have risen about 20% since Covid-19 began spreading in China in February. Over the same period, prices for U.S. corn futures have fallen 12%. The jump has pushed food inflation in China into double-digits, an uncomfortably high level for Beijing, in recent months.” Result: Buying more crops abroad, including recent hefty corn buys from the United States. Domestic corn prices have surged in part due to a 90% plunge in government stockpiles in recent years as Beijing has tried to reduce the role of the state in the buying and selling of the crop. Some analysts believe that at the current rate government reserves may run out as soon as the end of August. This has led to rampant speculation by traders who are hoarding the crop, leading the Ministry of Agriculture and Rural Affairs to warn it was “not appropriate” for traders to hoard the commodity. State media has also urged authorities to crack down “severely” on speculation. Dalian future were slightly lower today but well off early-session lows.
The weekly CFTC Commitment of Traders Report showed funds held smaller net-short positions than expected as of July 28. Money managers increased their net short position in CBOT corn futures and options to 143,280 contracts from 137,770 a week earlier. The holdings are nearly identical to the one from three weeks earlier, but it is far less bearish than their early June net-short position of nearly 300,000 contracts. Funds increased long positions to the highest level since early March, but smaller than normal for this time of the year. Through July 28, money managers reduced their net long in soybean futures and options to 62,161 contracts from 75,809 in the week before. However, commercial net short in soybeans is the largest for the time of year since 2016. Fund managers cut their net short in soymeal to 19,464 futures and options contracts from 29,178 a week earlier. Funds increased bullish bets in soybean oil during the same period by just 652 futures and options contracts to 37,549. Money managers made very slight changes to their wheat position through July 28, increasing their net long in SRW wheat futures and options to 1,699 contracts from 474 a week earlier In HRW wheat futures and options, funds increased their net short by 867 contracts to 19,026, and they raised bearish Minneapolis bets by 472 contracts to 21,125.
World stocks began August cautiously as U.S. lawmakers struggled to agree on the next round of coronavirus aid. In Europe, stocks were up1.6% as technology share led higher. U.S. stock futures are pointing to a higher opening on Wall St. despite the jitters on the lack of a progress on the stimulus package. Factory activity data from China showed the fastest pace of expansion in nearly a decade. That helped Chinas stock market rally, offsetting worries about U.S.-China relations
On Friday, Fitch Ratings cut the outlook on the United States triple-A credit rating to negative from stable and said the direction of fiscal policy depends in part on the November election and the resulting makeup of Congress, cautioning that policy gridlock could continue. Those concerns have hardly hit the U.S. technology sector, evident in Fridays record highs, with Apple overtaking Saudi Aramco to become the worlds most valuable company.
The euro, yen and many major currencies were lower against the dollar today. Both euro and pound recorded their best monthly gains in nearly a decade in July. Dollar bears also took some profits on crowded short positions, but any further gains were capped by the slowing U.S. economic recovery from COVID-19 and real rates breaking below -1% for the first time. The real rate hit a record low amid a marked flattening of the yield curve as investors wager on more accommodation from the Federal Reserve’s monetary policy.
Global coronavirus cases surpassed 18 million as the pandemic is now adding a million infections every four days, prompting more lockdowns around the world. The U.K. is looking at all options for tackling flare-ups, following reports that a London-wide lockdown is being considered. Any remaining hope that coronavirus would take a holiday has been all but crushed. At its current pace of about 250,000 or so new cases a day, there could be more than 50 million infections worldwide by the end of 2020. The virus is expected to remain a formidable adversary until a first generation of effective vaccines can be rolled out, which many experts expect in 2021.
Corn: December corn futures are bouncing off support just above contract lows. Now is the time for the bulls to make a stand as a move into new lows will likely attract new selling. Thursday’s lows in crude oil and its products are near-term benchmarks and key to market direction.
Soybeans: Soybeans are supported by surprisingly firm demand for soyoil for U.S. biodiesel production as COVID-19 has caused demand destruction in other sectors. The U.S. Energy Information Administration said volumes of soyoil used for biodiesel in May rose to 778 million pounds, up from 672 million pounds in April. Monday afternoon’s USDA soybean crush report for June is expected to come in at 177.8 million bu., the largest June number on record and up from the previous high of 169.5 million bu. in June 2018. However, crushing will slip from 179.5 million bu. in May and would be the smallest monthly number since February.
Wheat: December SRW wheat continues to pause between the support at the 100-day moving average and resistance at the 200-day moving average. Last month’s highs and lows are key technical barriers for the next prices move. Agriculture consultancy IKAR said on Monday that it had raised its forecast for Russias 2020 wheat crop to 79.5 MMT from 78 MMT earlier. Russian wheat export prices fell about $3 per MT last week after three weeks of growth, under pressure from the arrival of the new crop and the weakening of the ruble against the dollar IKAR said on Monday. Egypts state grains buyer, GASC bought 350,000 MT of Russian wheat and 120,000 MT of Ukrainian wheat last week. The European part of Russia was mostly dry last week but rains are expected to arrive to some of its regions this week. Some rainfall was seen in parts of the Urals and Siberia last week which could improve the condition of spring wheat sowings in the area, SovEcon said, but added that it was too late for any significant improvement. Ukraine’s production of milling wheat is forecast to fall to 40% of this year’s crop, down from 70% last year, APK-Inform said today. That will hurt Ukraine’s competitiveness on the world market. Australian weather is also looking more positive, raising the prospects of more wheat exports from Australia after its virtual three-year absence from export markets. The Brazilian wheat crop could surpass 7 MMT this year and reach a record high, possibly cutting the countrys import demand.
Cattle: High weekly and monthly closes in the cattle complex last week were bullish, especially since many key contracts closed above prior highs and/or key resistance. Small pauses are possible to start August, but upside potential is gaining momentum. It was the sixth weekly gain in seven weeks. Cash cattle prices firmed as the wee progressed, and futures are signaling traders expect cash strength to continue. Last week’s kill was up 0.8% from year-ago, with average weights up 2.5% from year-ago but down marginally from the week prior. The week-to-week decline signals backlogs are easing. Last week’s cattle slaughter came in at an estimated 638,000 head, versus 632,784 head last year. The Choice cutout increased $1.46 per cwt from the day before to $203.26 per cwt on Friday and were up from $201.77 a week earlier. The Select cutout declined $1.61 per cwt to $189.89 on Friday and down from $190.63 a week earlier. The reported boxed beef trade for the week was 489 loads, 5.8% higher than the 462 loads last week.
Hogs: Futures slumped to four-week lows on Friday and closed higher. Slaughter continues to top year-ago, up 8.4% last week. While this is necessary to work through backlogged animals, it has made it difficult for the product market to mount any sort of rally. Pork production was estimated 10.6% over year-ago levels the week ending Aug. 1. Average weights slipped 1 lb. from last week, but they were still 6 lbs. above year-ago levels. Pork processing margins were positive by $42.67 per head versus $61.44 per head the week before.
Corn: Steady to up 1 cent
Soybeans: Up 3 to 4 cents
Wheat: Up 3 to 5 cents
GENERAL COMMENTS: It is the last day of July trading and some of the action overnight reflects position evening heading into August when weather will determine soybean yields and the size of corn kernels. The corn and soybeans markets have uncovered Chinese demand for U.S. supplies this month, including yesterday’s record one-day corn sales announcement. Total new-crop soybean sales commitments rose to 13.7 MMT as of July 23, the most since 2014. The Chinese demand story will provide underlying support, but the current good corn and soybean crop conditions are sure to cap any serious rallies. Wheat is following higher and looking to extend its monthly gain on recent export sales improvement.
USDA’s daily export sales reporting program announced private exporters reported two large sales this morning but none to China. Mexico bought 114,300 MT of corn for new-crop delivery. The Philippines bought 222,000 MT of soybean meal for new-crop delivery. The sales are unlikely to provide new support going into the weekend, but may be a sign that the stepped up Chinese buying of U.S. commodities will help to spur buying by other importers.
Archer Daniels Midland expects a groundswell of export demand in the second half of 2020, led by robust purchases by China, as the coronavirus pandemic fuels food security concerns around the world, the company said Thursday. After record export volumes from South American facilities helped ADM deliver a stronger-than-expected second-quarter profit, Brazilian soy stocks are nearly depleted, according to the company’s CEO on Thursday. The United States will be the prime supplier to the world, he added.
Chinas Politburo met Thursday and announced that the Fifth Plenum will meet in October and will “assess the proposals for formulating the 14th Five-year (2021-2025) economic plan. China’s Xinhua news agency summarizing the Politburo meeting did not mention the U.S. directly, but hinted that China was not expecting an all-out conflict with Washington even though the “international environment is becoming increasingly complex ... Peace and development are still the themes of the times … but there will be changes in opportunities and challenges,” the paper said. China President Xi Jinping called for a greater push on reforms to stimulate domestic demand and the economy to ride out mounting risks and challenges, saying conditions remain “complicated and grave,” the report said.
Meanwhile, Hong Kong authorities barred a dozen pro-democracy candidates from seeking government offices and jailed four others over social media posts, in a show of Beijings full power under the new security law.
Global stock markets were mixed overnight even as U.S. markets point to a stronger opening on the heels of strong earnings reports from the big tech companies. Gold and crude oil also trading higher into the end of the month. Amazon, Facebook, Apple, and Google saw their combined market value swell by $250 billion thanks to earnings that shocked even Wall Street. Apple especially trounced analyst forecasts, with locked-down consumers snapping up new iPhones, iPads and Mac computers to stay connected during the pandemic. Combined, Apple, Amazon, Google and Facebook now boast a market cap above $5 trillion, about a fifth of the entire S&P 500.
Meanwhile, just as the full scale of the pandemics damage across economies from Spain to the U.S. shows up in GDP numbers, the virus is surging again. Millions of people in northern England returned to a partial lockdown. Italy, the original European epicenter, has also seen an increase in cases, along with France, Germany and Spain. The U.S. saw unprecedented deaths in Texas, Florida and Arizona, while California endured its second-deadliest day. The latest economic fallout: Spain’s economy shrank 18.5%, the deepest so far in Europe, data on Friday showed. France and Italy contracted 14% and 12%, respectively. Bad, yes, but not as dire as the record 32.9% downturn in the American economy in the second quarter.
The sense of apprehension toward the U.S. economy was evident in some of Federal Reserve Chair Jerome Powells comments this week. A rally in U.S. bonds has now pushed benchmark yields through the bottom of the trading range they have been in since late March. The 10-year Treasury yield fell toward 0.53% early Friday, following weak U.S. GDP data. A close below the range opens up the door to a retest of March’s record low, when it plunged as far as 0.31%. Five-year yields are already at fresh lows. Meanwhile, the dollar continued its slide against major peers.
Corn: December corn are just above monthly lows and the June contract lows to start trading this morning. The lack of a stronger price reaction Thursday after the record one-day sale to China has market bears looking to test contract lows. Nonetheless, the corn market in China continues to be hot despite the purchase of U.S. corn and active sales of government stockpiles. The government has tried to cool the market with stricter requirements for the reserve auctions and releasing stockpiled rice for feed. Wheat feeding has increased as corn prices have gone above wheat prices in many markets, but corn still keeps rising.
Soybeans: November beans are higher for the month but in the middle of the July price range. Look for prices to remain supported into the end the month. Monday afternoon’s USDA soybean crush report for June is expected to come in at 177.8 million bu., the largest June number on record and up from the previous high of 169.5 million bu. in June 2018. However, crushing will slip from 179.5 million bu. in May and would be the smallest monthly number since February.
Wheat: December SRW wheat is heading for a higher monthly close after falling to new contract lows in June. The markets will remain choppy until there is more clarity on crop production across the Northern Hemisphere. Ukraine’s grain exports fell roughly 33% in July to 2.33 MMT, the country’s economy ministry reported today. That tally included 1.19 MMT of wheat, 424,000 MT of corn and 714,000 MT of barley. Ukraine harvested a record-setting crop of 75.1 MMT in 2019, but grain crop prospects are lower this season due to adverse weather. Argentine farmers have struggled to plant all their intended wheat acres due to dry weather, and frost in recent morning added stress to those acres that were planted into dry soils, the Buenos Aires Grains Exchange said in a weekly report yesterday.
Cattle: Live and feeder cattle futures have rebounded from steady losses on Monday and are now positions to test the resistance at the July highs. Gains were powered in part by strong weekly beef exports, signaling the price drop in beef has caught the attention of overseas buyers. Meanwhile, Choice and Select boxed beef values climbed 69 cents and $2.01 on Thursday, with movement modest at 137 loads. Cash prices continue to edge higher, improvement futures trader sentiment even with the large premiums.
Hogs: Futures slumped to four-week lows on Thursday and are poised for a low-range monthly close today without an unexpected rebounded today. Futures have worked to narrow their premium to the rising cash hog index this week, with the index now trading at a modest premium to August lean hogs. Meanwhile packer profit margins have fallen nearly $20 over the past week but remain solidly in the black at $37.65 a head. Weekly pork export sales were impressive on Thursday, with USDA reporting sales rising 24% from a week earlier on larger sales to China and Mexico. But mounting tensions with China and rhetoric about a Cold War between the two countries offset the bullish news. Chinese hog prices recovered this week. There was a new report of African Swine Fever in the southwestern city of Chongqing, the first official report since early June. China is pushing poultry consumption as the healthier alternative to pork according to the US Attaché to China. So much production growth has occurred in the vacuum created by the hog industry due to ASF that habits are shifting permanently to including more poultry in the Chinese diet. Poultry production expanded 8-17% depending on the official source from 2019 to 2020. The Attaché expects another 3% growth in poultry production in 2021.
Corn: Up ½ to 2 cents
Soybeans: Down 2 to 4 cents
Wheat: Down 1 to 4 cents
GENERAL COMMENTS: Corn is holding near long-term support, halting a four-day drop, as Chinese corn prices continues to rise and spur speculation that shortages are developing, and imports will rise. China has sold almost all the corn auctioned from the 2014 and 2015 harvests and stored in state silos this year with prices climbing with each new sale since May. China again sold 100% of the total offered in this morning’s state corn reserve auction of 4 MMT at an average of 2,037 yuan/MT, or about $7.39 a bushel. USDA did announce new large sales to China this morning but no new soybean business.
Gains may be capped by the overall favorable crop conditions despite dryness in Iowa and other parts of the Midwest. Soybeans were slightly lower, pressured by few weather problems in the U.S. and concerns that elevated tensions between Washington and Beijing could curb Chinas appetite for U.S. supplies of the oilseed. With nearly seven months gone, an ambitious $36.5 billion target for Chinese imports in 2020 may not be quite out of reach, but its looking like a rising hurdle. While orders for soybeans have started to pick up, sales to China will need to be active. Wheat continues it recent choppy trade with prices moving lower this morning after rebounding yesterday.
USDA’s daily export sales reporting program announced private exporters reported two large sales of corn this morning and give corn some added support this morning and signal prices have reached levels to spur improved demand. China bought 1.937 million metric tons (MMT) of U.S. corn for new-crop delivery. In addition, another 130,000 metric tons (MT) of corn were sold to unknown destination for new-crop delivery.
U.S. export sales in the week ended July 23 were stronger than expected for wheat and soybeans but disappointing for corn. USDA reported this morning that net old-crop soybeans sales fell to 257,800 MT, down 45% from the prior four-week average and below trade estimates. However, new-crop sales jumped to 3.344 MMT with China buying almost 2.0 MMT and unknown destination accounting for 1.23 MMT. Wheat last week rose 10% to 676,600 MT from a week earlier and were nearly 30% higher than the four-week average. Old-crop corn sales were a net reduction of 29,300 MT as light new sales were offset by reduction primarily to Canada, Mexico, Panama and El Salvador last week. Traders were looking for sales in the 400,000 MT to 1 MMT range. New-crop corn sales were also disappointing at 638,700 MT, well below the 1.5 to 3.0 MMT expected by traders surveyed by Reuters.
The first look at second-quarter GDP, which was forecast to plunge an annualized 34.5% collapsed 32.9%, the most on record going back to the 1940s. Though activity starting to improve in May, momentum has slowed amid the resurgence in the Covid-19 outbreaks. Already this morning Germany reported a record 10.1% slump in the quarter. The U.S. merchandise trade gap unexpectedly narrowed in June for the first time in four months as exports jumped by the most on record, signaling the downdraft in global commerce is stabilizing. The overall balance shrank to $70.6 billion last month from $75.3 billion, Commerce Department data showed Wednesday.
Continuing worries about coronavirus and some disappointing earnings are helping push global stock indexes lower this morning. Gold and crude oil are both trading lower and the dollar is slightly stronger, adding a slightly negative backdrop to the grain markets this morning.
Fatalities from Covid-19 passed 150,000 in the U.S. as Texas, Florida and California reported record daily deaths. Germany is seeing a new spike in cases and Tokyo saw a record number of infections. Health officials bracing for a new onslaught of cases when summer is over are alarmed by what Australia is experiencing as winter sets in. The health and economic damage from the crisis in the U.S. could lead to a stop-gap bill from Congress to extend federal unemployment insurance and protections against evictions as Democrats and Republicans remain far apart on a full stimulus package. A $600-a-week federal unemployment benefit that has helped keep tens of millions of Americans afloat is likely to expire on Friday, without agreement among the White House and Congress about whether to extend it.
Fed Chairman Jerome Powell didnt make much new news yesterday. There were no programs unveiled. No changes to asset purchase plans. No changes to rate policy or updates on forward guidance or Yield Curve Control or anything like that. And yet markets surged anyway. The takeaway is that the Fed is going to be on hold for an extremely long period of time, regardless of what happens in the real economy. And everyone understands that the Fed is committed to this. Thats because until the economy genuinely starts to resemble the pre-crisis economy, in terms of employment and wages and prices, theyre not going to change policies.
Corn: December is sitting about 4 cents above the contract low at $3.22, which is long-term support.
Soybeans: November beans moved down near support at $8.80 overnight and rebounded into this morning break after the USDA weekly export sales report.
Cattle: Steady to weak
Hogs: Steady to weak
Cattle: Cattle futures extended Tuesday’s recovery yesterday and now are set to test swing highs left on the charts on July 27 and July 16. A close above those highs should increase upside momentum. But futures’ premiums to cash bids remain a ceiling on gains. Some additional cash cattle sales took place yesterday in Colorado at $98, in Iowa from $101 to $102, and in Kansas and Texas from $96 to mostly $97. This was up from a light test early in the week and from last week’s action that ranged from $96 in the Southern Plains to $100 in the Western Corn Belt. Yesterday’s trade was active in southern areas but lighter to the north, where backlogged numbers are smaller. Wholesale beef trade was active yesterday with prices mixed. Choice cutouts fall $1.85 and Select cutouts were up $1.17. This morning’s export sales data for the week ended July 23 showed sales jumped 81% from the prior four-week average to 29,500 MT, a new marketing-year high. South Korea and Japan dominated sales and USDA reported sales of 1,400 MT to China last week.
Hogs: Futures were on the defensive yesterday but closed well off early session lows. That makes Wednesday’s low a key short-term support. Friday’s close to end July trading will have an important directional impact on August trading. Cash hog bids slipped 37 cents at midweek, paring this week’s small gains. The pork cutout value fell $1.50 on Wednesday, with hams leading the decline. Movement slowed to 335 loads. Export sales last week rose to 39,600 MT, up 12% from the prior four-week average. China bought a net 17,800 MT and Mexico purchases 15,400 MT. Weekly pork shipments slowed to 31,500, down 3% from the prior four-week average.