Ahead of the Open: Grains Seen Higher on Exports; Soy May Gain on Easing China Tensions

Posted on 06/07/2018 8:07 AM

Crop calls


Corn: 1 to 3 cents higher
Soybeans: Steady to up 2 cents

Wheat: 10 to 13 cents higher


Corn seen gaining back a portion of the losses sustained Wednesday when futures fell to two-month lows. The mid-March lows are key support in the near term. Weather forecast is hot with showers expected from South Dakota to Indiana the next five days. Models are divided about amounts, coverage and location, so traders will be hanging on each new private and government forecast. Long-term outlooks still raise risks for hotter, drier weather during July pollination. South Korea continues active buying of global supplies on recent decline in prices.


Soybean futures seen higher to start after Secretary of Commerce Ross says U.S. has reach a deal with China telecom company ZTE to accept fines, management changes for shipping U.S. technology to Iran. While Ross said this deal will not impact talks with China government on tariffs and trade, it is viewed as a sign of trade-talk progress—possibly limiting new China tariffs on U.S. soybeans. Still, futures lack strong direction amid trade tensions and mixed U.S. weather forecasts. French President Macron has joined Germany in warning that he will not sign a joint statement at this week’s G-7 summit in Quebec unless the U.S. makes major concessions on trade and other issues. Uncertainty about headline risks from the meeting will limit trading interest.


Wheat futures set for third straight gain on speculation adverse weather will curb output in Russia, Australia, Ukraine and parts of Europe, potentially raising demand for a smaller U.S. crop.  Harvest is moving ahead for HRW wheat in the Great Plains with disappointing yields and higher protein. Improving spring wheat crop conditions in northern U.S. Plains may cap gains. Action this week suggests speculators have been buying back short wheat versus long corn or soybean positions.


Livestock calls      


Cattle: Steady to lower
Hogs:  Mixed to lower

Cattle futures seen starting on the defensive after failing to hold earlier gains. August contract reached a one-month high and closed in the bottom third of the daily range. Wholesale beef prices were slightly lower Wednesday and keep the market nervous about where packers will start bids this week. A light test at higher money yesterday will need additional confirmation to improve futures buying interest.


Hog futured shook off the bearish news of Mexican imposition of pork import tariffs yesterday and now the focus is on falling hog weights because of the early heat and current marketings. Still, wholesale carcass price drifted lower yesterday on weaker butts, hams, picnics and ribs.  Weekly export sales fell 60% from week earlier to the lowest this year, USDA said this morning


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