Ahead of the Open: Wheat Rebounds on Smaller World Crop; Beans Down ahead of USDA Report

Posted on 09/12/2018 7:58 AM


Grain Calls 

Corn:  Steady to down a penny

Soybeans: Down 3 to 5 cents

Wheat: Up 4 to 8 cents


General Comment: Grain trading will be cautious before the USDA releases its monthly Supply & Demand Report at 11:00 a.m. CT this morning.

Fresh sparring between Washington and Beijing over trade kept pressure on world stock markets Wednesday. Asia stocks fell for a 10th straight session, its longest losing streak since 2000. President Trump on Tuesday said the U.S. will continue its tough stance with China on trade, increasing expectations for the White House to soon announce implementing $200 billion of new tariffs on China goods. Earlier Tuesday China told the World Trade Organization its wanted to impose $7 billion a year in sanctions on the U.S. in retaliation for non-compliance with a ruling in an earlier dispute. Canadian Foreign Affairs Minister Chrystia Freeland pressed pause on what has been positive NAFTA negotiations with the U.S. on Tuesday, saying she needed to leave the talks to speak in person with Prime Minister Justin Trudeau about the state of discussions. The National Weather Service is warning of potential for catastrophic flash flooding when Hurricane Florence, currently more than 575 miles from the coast, makes landfall late Thursday or early Friday. Smithfield Foods will temporarily shutter the world’s biggest hog slaughter plant in Tar Heel, North Carolina today.  North Carolina is also home to about 9% of the broiler flock and 13% of the turkeys.  Hurricane Florence, set to strike less than two months before the November midterms, has the potential to inject a fresh dynamic into the race for control of Congress


Corn futures are likely to drift sideways this morning, continuing this week’s pattern of non-commitment. Traders are looking for a small cut in U.S. production and global output. It will take larger cuts or an unexpected increase in crops to knock the market out of its sideways, base-building pattern. Funds are still holding a modest net-short position in corn futures and options ahead today’s report.


Soybeans fell to two-month lows overnight and will likely continue to drift lower on expectation for USDA to raise both U.S. and world crop forecasts later this morning. Additional pressure this morning stems from China slashing its forecast for 2018-19 soybean imports to 83.65 million metric tons, down 10.2 MMT from last month's estimate, according to data released today by the Ministry of Agriculture and Rural Affairs. The forecast is lower than the 93.9 MMT imported during the 2017-18 crop year. The ministry said the lower forecast for soybean imports was due to the promotion of lower-protein feed for livestock and poultry amid tariffs on U.S. soybean imports.


Wheat futures seen trading higher this morning on further cuts expected in global wheat inventories in today’s USDA report. Egypt’s state-buyer GASC is tendering for an unspecified amount of wheat for delivery between Oct. 25 and Nov.4. Cheapest offer came on 55,000 MT of Russian wheat and up from last week’s purchase of 60,000 MT.


Livestock Calls

Cattle: Steady to weak
Hogs: Steady-firm


Cattle seen opening steady to slightly lower on mixed to lower cash meat and cattle prices. Choice fell 23 cents and Select dropped 62 cents on Tuesday.  Slaughter rose to 238,000 in the first two days of this week from 232,000 last year. Cash cattle trade is light with good demand reported at local auctions.


Hogs seen steady to higher on firming cash market fundamentals. The pork cutout value climbed a solid $1.51 on Tuesday and movement was impressive at 421.45 loads. And cash hog bids continue to climb, rising $2.64 yesterday. Hurricane Florence is likely to disrupt pork production in North Carolina, which processes about 13% U.S. hogs daily, with as much as 15 inches of rain forecast for the state. China has banned the transport of live hogs from the 10 regions bordering the six provinces that have reported African swine fever over the past month. Live markets will also be shut in these border regions, the country’s ag ministry. The 10 provinces impacted by this move slaughtered a combined 217 million hogs in 2016, around a third of the country’s total herd, according to official statistics. This has already pushed up prices in some regions.

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