Ahead of the Open: Corn, Soybeans Seen Higher After Recent Fund Selling With Weather Still A Threat

Posted on 07/17/2019 7:51 AM

GRAIN CALLS:

Corn: Up 3 to 5 cents
Soybeans: Up 3 to 5 cents
Wheat: up 1 to 4 cents

General Comment: Corn and soybeans rebounded from overnight losses after finding new buying interest near Tuesday’s lows. Prices rebounded on worries this week’s heat may return after a short cooling next week. Also, rains from Hurricane Barry failed to reach as far north or provide coverage and amounts that provided much benefit to crops this week. Prices will remain highly volatile for several weeks as crops enter the key development stages. Wheat is following corn higher.

An intense t-storm cluster in southeast South Dakota will move into northeast Nebraska and northwest Iowa this morning. That put pressure on prices overnight. However, it is unclear whether it will continue or dissipate as it moves east. New storm clusters are possible later today and tonight from Iowa to Wisconsin and will be very important for reducing the stress to a portion of the crop from hot temperatures the next five days.  Heat breaks across the Midwest by Monday and will be followed by three to five days of cooling. Thereafter, the central U.S. will be divided by heat to the west and coolness to the east. Rainfall to the south will be limited to some t-storms along the cool front Sunday into Monday. A few showers next week and through late month will occur but some net drying is likely and will need to be monitored. Expected continued big fluctuations in model forecasts past five days and more volatile price action.  

USDA's Risk Management Agency (RMA) has a running tally of prevent-plant acres. Usually reliable sources detail prevent-plant (PP) acres for corn as of early July were 7 million to 8 million acres, while soybeans were 2 million to 3 million acres, with the total PP tally for all crops put at 12.5 million acres. Final amounts are expected to go higher, sources advise. USDA Undersecretary Bill Northey earlier said total PP acres would likely go over 10 million acres, and that appears to be the cased based on internal USDA numbers.  

AgMarket.net along with other companies and university agronomist used planes to take high-resolution photos of more than 157,000 acres in the five states. They concluded harvested corn acres would be about four million less than USDA said earlier this month and the year would be about 10 bushels smaller. That would project a crop of 12.425 billion bushels, down 1.45 billion from USDA projection on July 11.

President Donald Trump reiterated overnight that he could impose additional tariffs on Chinese imports if he wants, after promising to hold off on more duties in a trade-war truce he reached with China’s Xi Jinping last month. “We have a long way to go as far as tariffs where China is concerned, if we want. We have another $325 billion we can put a tariff on, if we want,” Trump said. “So, we’re talking to China about a deal, but I wish they didn’t break the deal that we had.” China said Wednesday that further levies would complicate the negotiations. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer expect to have another call this week with top trade negotiators in China, and the two may travel to Beijing for meetings if the discussions by phone are productive, Mnuchin said Monday.
Meanwhiles U.S. and Japan trade officials are working on a small trade deal that would involve agriculture and autos, Reuters reported, citing three unidentified industry sources familiar with the talks. The deal could be agreed by President Donald Trump and Japanese Prime Minister Shinzo Abe in September in New York. The pact could involve Japan offering U.S. farmers new access to markets in return for reduced tariffs on Japanese auto parts, the report noted, citing an auto industry official.

USDA daily export reporting service said private exporters did not report any large new farm commodity sales. Market continues to wait for more Chinese purchases that the Trump administration says are coming.

 

LIVESTOCK CALLS:

Cattle: Mixed to weak    
Hogs: Mixed to firm

Cattle: Cash trade was very limited at steady to firm prices on Tuesday. Wholesale beef prices were slightly lower with Choice down 34 cents and Select slipping 5 cents. Sales were good. Concern about declining beef prices continued to hang over the markets. Decreasing beef prices have spurred expectations that meat may be less aggressive when bidding to buy cattle. USDA’s monthly Cattle on Feed Report on Friday is expected to show feedlot supplies are up 1.8% from a year ago on July 1 even as placements fell 2.3% in June, according to a poll of analysts by Reuters. Marketings fell 3.1% below a year last month.  

Hogs:  Wholesale pork prices jumped $2.90 to $75.80, the highest since June 21. Sales were moderately active. Still, this is the lower cutout value for this time of the year since at least 2013 and coming at a normal time for a high in values. The hog market’s counter-season.   China's pork prices continued to rise in June, up 29.8 percent year on year to 21.59 yuan (about 3 U.S. dollars) per kg in June mainly because of the influence of the African swine fever, according to Ministry of Agriculture and Rural Affairs (MARA) on Wednesday. While pork prices stand to keep rising in the second half, increased livestock and poultry production has optimized the consumption structure. As China expanded its imports of pork products, meat supply in China is expected be stable, the Ministry said. Smithfield Foods has increased shipments of pork to China "with projected weekly volumes expected to triple," according to minutes from the Port of Virginia's most recent public board meeting in May. It's not clear exactly how much Smithfield is exporting through the port. The company, famous for its ham, declined to provide someone to comment, according to the Virginian-Pilot.

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