GRAIN CALLS
Corn: 2 to 6 cents lower
Soybeans: 18 to 22 cents lower
Wheat: 4 to 8 cents lower
GENERAL COMMENTS: Overnight trade saw losses across the grains complex, led by the disappointment in a lack of further commitments from China regarding soybean purchases. Continued technical pressure also played a role, with winter wheat markets already reeling from four consecutive days of losses. Key outside markets see the U.S. dollar index roughly 20 points firmer and WTI crude oil futures roughly $2.25 higher at $94.60
“Soybeans are notably absent” from the U.S. and China detailed plan to cut tariffs on about $30 billion of imports from each country after last week’s summit between Presidents Trump and Xi Jinping, Bloomberg reported overnight. “Beijing has separately committed to buying 25 million metric tons from the U.S. annually through 2028. Placing soybean purchases on a separate track outside the Board of Trade gives Beijing leverage to restrain U.S. actions, especially ahead of the midterm elections in November, said Feng Chucheng, founding partner of Beijing-based Hutong Research,” Bloomberg reported. The proposed tariff relief spans Chinese toys, kitchenware and other household goods, as well as other U.S. agricultural products, coal and medical equipment. About 90% of the covered products would receive most-favored-nation treatment, China’s Commerce Ministry said in a Monday statement. The reductions will take effect once both sides complete procedures required under their domestic laws. “This arrangement will help to further stabilize China-U.S. economic and trade relations and create favorable conditions for China’s exports of relevant products to the U.S.,” the ministry said. “The expected relief for $60 billion in two-way trade was one of the most tangible outcomes of Xi’s state visit to Washington, even though the amount is a fraction of the $415 billion in total goods exchanged between the world’s largest economies last year,” said the report.
“There is much nervousness in the commodity marketplace about El Nino and its influence on world agriculture production,” says World Weather Inc. in a special report released late Friday. “That nervousness is about supply and demand, but there are many farmers operating in alarm mode because of the El Nino forecast and some of the added hype over its potential. Many market commentaries in recent weeks have raised discussion about the potential for South America weather to be adverse because of El Nino and some of that speculation has helped to support some market bullishness,” said the report. “The impact on Brazil production could be greater than past strong El Nino events since a greater portion of the nation’s crop is now produced in center-west, where there is some tendency for erratic and lighter than usual rain in El Nino events. Northeastern Brazil is normally most negatively impacted by El Nino and the region does produce a larger percentage of the crop than in 1965,1982, 1997 and 2015, which are the most recent very strong to super El Nino years. World Weather Inc. anticipates some influence but yield losses should be small. South America typically loses far less production from weather in an El Nino year than in a La Nina event, but that may be changing. One of the biggest reasons for greater concern about Brazil production is that there is a much greater percentage of soybeans produced farther north in the nation now than many decades ago,” said the report.
Brent crude climbed above $107 and Nymex WTI futures above $95 per barrel overnight, recovering losses from the previous session after President Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, raising concerns that the restoration of oil flows through the critical waterway could face further delays. Trump also said Tehran had overplayed its hand and expects negotiations to resume this week. Meanwhile, Iran said it is waiting for a definitive U.S. response to its seven-day proposal to reopen the strait and other demands, adding that it will not ease its conditions after Trump rejected Tehran’s latest plan. Elsewhere in the Middle East, tensions remain high as Saudi Arabia intercepted Houthi drones heading toward Riyadh, along with a missile targeting Khamis Mushait in the south. Alerts were also issued in Abha and Jazan, where Aramco operates energy facilities.
CORN: December corn sees first resistance at $5.25, then the 10-day moving average of $5.30 1/4. Support is found from the 40-day moving average at $5.15 1/2 with further support at the key $5.00 mark.
SOYBEANS: November soybeans have fallen below the $13.00 mark overnight, which now serves as an area of initial resistance to push back through. Further resistance will stem from the 10-day moving average of $13.12 1/4, then $13.25. Firm support is in the area of $12.75 1/4 at the 40-day moving average.
WHEAT: December SRW wheat faces continued technical selling pressure. Resistance comes from the 40-and 10-day moving averages at $7.10 3/4 and $7.13 1/2, respectively. Support is in the area of the 100-day moving average at $6.83 1/2.
LIVESTOCK CALLS
CATTLE: Choppy/higher
HOGS: Choppy/lower
CATTLE: Live and feeder cattle futures are expected to open choppy to higher. Cash fundamentals on Friday were mixed, with Choice boxed beef up $2.71 to $378.83, but cash cattle trade for the day averaging $220.50, down from the prior weekly average. Still, last week’s technically bullish close and Cattle on Feed reports indicating feedlots could see tighter inventories ahead look to offer support.
HOGS: Lean hog futures are expected to open choppy to lower. Pressure from technical selling is likely to continue, though some support at last week’s low of $78.10 may prevent futures from carving new contract-lows. The most recent CME lean hogs index is down another 27 cents to $82.20.