Ahead of the Open: Soy Lower on Weather, Trade; Bounces from Overnight Lows

Posted on 06/08/2018 8:06 AM

Crop calls

 

Corn: Mixed
Soybeans: Down 2 to 4 cents

Wheat: Down 1 to 3 cents

 

Corn futures seen defensive as rains move from South Dakota to Ohio into the weekend. Prices are off the overnight lows because of mixed forecasts for next week’s rainfall amid warm temperatures.  Market holding well relative to soybeans, but still broke technical support this week.  Until there is threatening weather in the Midwest, the strong demand story only slows the losses as funds liquidate longs and set new short positions. This is not a place to be turning bearish.

 

Soybean futures remain on the defensive from increasing tensions between the Trump Administration and U.S. allies. Still, market bounced 8 cents off overnight lows. Key today is where market closes. Two-day Group of Seven meeting in Quebec, Canada through Saturday unlikely to produce a material breakthrough. A lack of clarity on U.S./China trade continues with U.S. tariffs set to take effect a week from today without a new deal. Weather is negative amid Midwest showers and warm temperatures for crop development.  

 

Wheat futures seen starting lower this morning amid increasing harvest activity across the southern Great Plains. The market is backing off early-week gains tied to dry weather threatening crops in Russia, Ukraine, Australia and parts of Europe. Traders want to wait to see next week’s forecasts. Exports are slow and while world inventories are shrinking slightly, they still remain historically large.  Spring wheat called higher on unwinding of spreads versus winter futures earlier this week.
 

Livestock calls             

                                                         

Cattle: Steady to lower
Hogs:  Mixed to higher

 

Cattle futures seen starting on the defensive after failing to hold early gains on Thursday. Wholesale beef was lower yesterday and has curbed expectations for a solid improvement in cash trade when it finally gets established today. If packers prove to be more aggressive, that will give the market a boost later in the session.

 

Hog futures rebound showed signs of slowing yesterday despite firm cash hog and pork prices. U.S. pork exporters can sell pork legs and shoulders to Mexico via a 350,000-MT import quota despite retaliatory measures announced this week, the government said Thursday. Traders will be cautious until new sales to Mexico are confirmed in the weeks ahead after the USDA export sales reported yesterday showed a marketing-year low in new exports.

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