Ahead of the Open: Weaker Dollar Spurs Short-Cover in Grains to Pare Weekly Losses

Posted on 09/14/2018 8:08 AM

Grain Calls 

Corn:  Steady to up a penny

Soybeans: Up 1-3 cents

Wheat: Up 5-8 cents

General Comment: Global stocks are firming, the dollar is weaker and grain prices are higher as expectations grew that the U.S. and China would open up new trade talks despite President Trump tweeting that the US has the trade advantage. He said he feels “no pressure” to resolve the feud. The president appears determined to enter any negotiation showing strength, but risks stoking Chinese fears that the U.S. president isn’t yet serious about striking a deal. A failure to even begin on another round of negotiations would signal it will be a long and bruising trade war. China shares fell after a short-lived rally from data that showed stronger industrial output and retails sales in August. Headlines will continue to keep global market erratic waiting for the details of coming meetings are scheduled. China will ask Wall Street firms for ways to improve ties with the U.S. and suggestions to open up its financial sector at a day-long meeting in Beijing on Sunday. Flooding from Hurricane Florence swept across the Carolinas as the massive storm surged towards the coast, threatening record rainfall and leaving scores trapped by rising waters and thousands without power. Grain and hog markets waiting for updates later this weekend for damage reports.

Corn futures are likely to trade steady to higher in consolidation of recent losses amid heavy fund selling to pushed futures to new contract lows earlier this week. The dry Midwest weather comes to an end by Tuesday with a return of rain and harvest delays. The markets now want to see combine results to confirm the USDA’s shockingly high national yield estimate earlier this week. Export demand and domestic use continues to improve with buyers looking to extend coverage at current low prices.

Soybeans market seen trading a little firmer in a second day of consolidation after the U.S. invitation to China to resume trade talks. Prices probably need to rise about 11 cents today to close above $8.44 basis November futures to confirm any bottoming action after futures set new contract lows earlier this week after the USDA forecast record U.S. and global inventories.

Wheat futures bounced from 8-week lows on bargain buying. Global wheat supplies in exporting nations remains fairly tight and major physical buyers were taking advantage of recent price weakness to step up purchases. Earlier this week Egypt's state grain buyer purchased 235,000 MT of wheat at an international tender while Algeria bought 630,000 MT. Tunisia and Saudi Arabia have also announced tenders.

Livestock Calls

Cattle: Steady

Hogs: Steady-higher

Cattle seen opening steady waiting for clear direction on this week’s cash trade. Negotiations are stretching late into this week with feedlots rejecting steady packer bids looking for more. Still, beef prices remain defensive for a second week. The futures charts still point higher after deferred futures rose to new contract highs this week.

Hogs seen steady to firm in a continuation of the monthly rally. The national average cash hog prices rose $1.22 on Thursday, up more than $12 this month. Wholesale pork carcass values up 19 cents on Thursday to the highest since Aug. 10. Belgium has confirmed an outbreak of African swine fever, marking a further spread of the disease that has hit farms in Eastern Europe and China and which could now threaten Western Europe's large pig industry. This is the first reported case of the disease in Belgium since 1985.  This new outbreak represents the expansion of the disease, for the first time during the current pandemic, into Western Europe," said Paul Sundberg, executive director of the Swine Health Information Center.

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