Corn: Futures closed making new session and weekly lows. December futures fell 6 ¼ cents to $3.70 ¼, while March was down 6 ¾ to $3.83 ¼. Corn prices extended this week’s decline amid some more rain in the forecast and global recession predictions. The yield curve in the U.S., Canada and the United Kingdom all turned negative today, where long-dated government bond yields fell below shorter-dated maturities, a historical predictor of recession. The weakening global economy and ongoing U.S./China trade tensions provide little incentive for speculators to start bargain buying after the USDA forecast a smaller drop in U.S. production than most expected in Monday’s monthly update. Not all forecasts are in agreement for some widespread rain and showers the next four days, so actual amounts and coverage will be important heading into the Pro Farmer Midwest Crop Tour next week.Traders are looking for Thursday’s weekly old-crop corn sales to total 100,000-300,000 metric tons (MT) and new-crop sales not much better at 100,000-400,000 MT.
Soybeans: Soybean started the overnight session with gains and saw back and forth price action through the day, but sellers took the reins as the session wore on and futures settled low-range and down 10 to 11 cents. Soymeal posted heavy losses for the day and soyoil futures ended narrowly mixed. The soybean market initially saw some support from the Trump administration’s decision to delay some tariffs on Chinese goods and some optimistic comments about the possibility of progress on trade talks. But comments from U.S. Commerce Secretary Wilbur Ross on Wednesday that China made no concessions in exchange for the U.S. tariff delays and that it was too early to assess where U.S./China trade talks reminded the market to keep its expectations in check. He also said that no date had been set for in-person talks. The market has moved sideways in the wake of USDA’s Monday reports that included smaller production and carryover than the market anticipated. But supplies are still pretty plentiful. Scouts on our Midwest Crop Tour next week will give the market an in-field look at this year’s soybean yield factory.
Wheat: Winter wheat futures prices closed up 1/4 to 2 1/2 cents today on tepid short covering after recent losses. HRW futures did dip to new contracts lows today. Spring wheat closed 1 to 2 cents higher. Look for the wheat market to continue to look to corn for direction. The big drop in corn prices this week does not bode well for the wheat market bulls. The world has plentiful supplies of wheat, as reconfirmed by Monday’s latest USDA supply and demand report. Germany’s 2019 wheat crop will likely total 23.81 million metric tons (MMT), a 17.5% gain from last year but a 40,000-MT decline from its forecast last month, according to the country’s association of farm cooperatives. Traders are awaiting Thursday morning's weekly USDA export sales report, which is expected to show U.S. wheat sales of 200,000 to 500,000 metric tons in the 2019-20 marketing year.
Cotton: December cotton futures closed up 16 points 59.57 cents today. Prices closed near mid-range. The cotton market did not fare too badly today, given that stock and financial markets are on edge, fearing slowing or even stagnant world economic growth. U.S. Treasury and world government bond yields continued to fall today. The three-month Treasury bill and two-year note yields are trading above that of the 10-year note, to produce a partially inverted yield curve. Also, China's economy stumbled more sharply than expected in July, with industrial output growth cooling to a more than 17-year low, as the intensifying U.S. trade war took a heavier toll on businesses and consumers, government data showed. Retail sales growth is also pointing to increasing consumer caution in China. All of the above are bearish outside elements for the cotton market. USDA’s cotton production estimate on Monday came in higher than expected, as did its global carryover forecast for 2019-20.
Hogs: August lean hog futures expired 40 cents higher at $79.40. October hogs led moderate to strong gains in the other contracts, ending $2.20 higher at $66.775. October hogs take over lead-month status at a $13 discount to the cash index. That suggests traders anticipate normal seasonal weakness through fall as slaughter numbers build into the end of the year. There is little or no China import premium built into the market, which isn’t a surprise given the lack of movement on a trade deal with China. The national direct cash hog price was $2.11 lower this morning. Seasonally, cash price generally trend lower through fall and early winter, though it’s not uncommon to see a modest recovery in early fall. Week-to-date hog slaughter is running 41,000 head (1.1%) above year-ago, which is lighter than the roughly 3% increase USDA’s June Hogs & Pigs Report implied. The market should be able to easily handle a modest year-over-year increase in supplies through fall.
Cattle: Cattle closed mixed, ending two days of limit-down losses. October closed down 75 cents at $98.50, while December rose 60 cents to $104.80. Feeder cattle surged $4.70 to the maximum $6.75. The rally in feeders would suggest the industry expected the Tyson plant closure in Kansas won’t last much past early October. An announcement on the timeline may happen at a press conference this afternoon. The fire chief told the local paper that the fire was contained to one room and was easy to contain. Midday beef prices continued to surge, up $5.05 in Choice cutouts and up $4.51 in Select. Choice is up $15 this week and sales have been very active. Packer margins have exploded in three days to an all-time high, incentivizing packers to add two shifts on Saturday if logistically possible. Majors had already made the decision to add after the news of the fire broke.