Ahead of the Open:

Posted on 11/06/2018 6:47 AM

Grain Calls

Corn: Steady to down 1
Soybeans: Down 1-3
Wheat: Mixed

General Comment: When the polls close this evening, we will start to find out if the Democrats have done enough to flip the House or if President Donald Trump’s vigorous campaigning has been enough to help the Republicans retain control of Congress. The mostly likely scenario projected by pollsters point to a Democrat-controlled House and a GOP Senate, which is likely to not cause a great new upset in the markets.

In another sign of thawing U.S./China relations the two nations will hold top-level security talks on Friday in Washington. Both governments have described last week’s telephone call between Presidents Xi Jinping and Trump as positive. The security talks were scheduled for last month but were postponed at the Trump Administration’s request amid rising tensions over trade, Taiwan and the South China Sea. China Vice President Wang Quishan reiterated China’s willingness to hold discussions work with the U.S. to end trade disputes. Wang echoed comments by Xi on Monday at a major trade fair in Shanghai that China will embrace greater openness but won’t be bullied by the U.S. demands to reverse its government subsidized companies, halt intellectual property rights transfers and make actual trade opening moves. Traders will be watching Trump’s post-election comments on whether he remains optimistic about reaching a trade agreement with China.

Corn is expected to face light pressure on the open as traders begin to ready positions for USDA’s reports Thursday. The market may find some support on speculation that yields may fall more than the 0.7 bushels per acre expected by the market ahead of USDA update on Thursday. Meanwhile, corn harvest slowed last week, with 76% collected as of Nov. 4, a point slower than expected and the five-year average.

Soybean harvest is now 83% complete, behind both the 89% reported a year ago and the five-year average. Uncertainty about the impact excessive rains had on yields will remain supportive for the market until the USDA updates its crop production estimates on Thursday. 

Winter wheat planting was 84% completed as of Sunday, behind the 90% average last year and the five-year average. Kansas, Oklahoma, Texas, Arkansas and California all remain more than 10 points behind their respective five-year averages. The crop was rated 51% in “good” and “excellent” condition this week. That’s behind 55% a year ago and the prior five-year average of 57%.

Livestock Calls

Cattle: Steady to weak
Hogs: Steady to weak    

Cattle futures are expected to trade steady lower in followthrough selling from Monday’s steep decline. Still, beef prices were slightly higher on Monday and average prices for steers rose in the five-area region to $114.95 and heifers gained to $115.22 as average dressed weights fell 4 pounds. Higher showlist numbers don’t bode well for higher cash trade this week.

Hog futures are expected to extend a four-day decline to end last week. Cash hogs fell for a third straight day on Monday and wholesale pork carcass values extended the decline to the lowest point since Sept. 14. Funds are liquidating longs after increasing net-long positions more than 4,000 contracts in the week ended Oct. 30.

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