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Trip Report

00:00AM Jul 08, 2008

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

I just returned from a trip to Tennessee... I just returned from a trip that took me from eastern Iowa to Chattanooga, Tennessee. I've seen a lot of Iowa and northern Illinois corn and soybean crops this season, and was very curious about what I'd find in the southern regions I traveled through over the July 4th weekend. But what I saw along highway 61 into Hannibal, Missouri, looked like more of the same -- variable, spotty and not the lush, quickly developing fields you usually expect to find at this time of year.

Of course, my travel in eastern Iowa took me (again) through flood-ravaged Cedar Rapids, Iowa, and along the Iowa City corridor until we ran alongside the Mississippi River in southeast Iowa all way south into St. Louis, Missouri. The crops through eastern and southeastern Iowa look about as tough as the cities hit by the flooding -- it's very evident where the crops are, and are not, recovering from flood waters. But I can't remember ever seeing this number of unplanted fields at this time of year. It's still mind-boggling to even begin counting the abandoned acres.

I expected to see a more mature stand of corn in southern Illinois, but it doesn't look much different than in eastern Iowa. The crop is behind in development, spotty, but not as much so as in eastern Iowa.

But to my surprise, the best-looking most lush and uniform crop on this route was in Kentucky and Tennessee. The short time we spent in far-southwest Kentucky, we saw over a dozen really, good-looking corn fields, from shooting tassels to fully tasseled. Keep in mind, the amount of acreage was small to say the least, just surprising to see such a lush crop there. Across Interstate 24 in Tennessee, I was also generally impressed with the color and uniformity of the cornfields.

Beans throughout the trip were generally short and variable. A more uniform soybean crop is seen south of St. Louis, but it seems like anywhere you go this year, beans need to put on some growth.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 23 to 27 cents lower. Futures were sharply lower overnight on spillover from yesterday's losses and overnight rains. Futures started the week gapping limit lower on the open and staying there. Futures were pressured by unexpected weekend rains, and more in the near-term forecast. December corn futures gapped limit lower and remained there. Initial support for tomorrow is last week's low of $7.36 1/4. Support extends into the June gap area between $7.03 1/2 and $7.15.

Soybeans: 30 to 33 cents lower. Futures saw sharp spillover pressure in overnight trade from yesterday's losses and overnight rains. Futures started the week sharply lower and extended losses to close mostly the 70-cent limit lower. Futures started the week lower on unexpected weekend rains, but sharply extended losses as near-term weather models show more rain in the near-term forecast. Much of the pressure also came from outside markets, as crude oil was sharply lower and the dollar was firmer most of the day - although closing slightly lower. If it weren't for sharp losses in the crude oil market, soybean losses may have been more contained, but sharp pressure in the commodity world weighed heavily on the soy complex.

Wheat: Narrowly mixed. Futures were narrowly mixed overnight amid spreading and some short-covering. Futures gapped moderately lower on the open yesterday but sharply extended losses on spillover from neighboring pits. Wheat at all three exchanges closed mostly about 50 cents lower. Wheat futures were pressured largely by limit losses in the corn and soybean pits, with outside markets contributing to the profit-taking pressure in the grain markets.

Cash cattle expectations: Watching beef market. The boxed beef market is off to a strong start, signaling July 4th weekend beef clearance was strong. Choice beef values rose $1.06 yesterday and Select was up 48 cents. Beef movement to start the week was solid at 214 loads. Cash sources say this signals a very good possibility of $1 higher cash trade later in the week.

Futures call: Mixed. Futures could see some short-covering following yesterday's sharp losses, especially with the beef market off to a strong start. October live cattle gapped lower on the open and hit sell stops on the move through support at last week's low. Futures were stopped by uptrending support drawn off the March and May lows. Followthrough selling today would begin to do some technical chart damage.

Cash hog expectations: Mixed. Packers saw hog margins climb sharply to start the week. As a result, cash sources say demand for hogs will improve and this could result in steady cash bids in some locations today. If packers begin to ramp up weekend kill plans, the cash market could stabilize.

Hog futures: Mixed. Futures are called to open mixed amid spreading. If the cash market can stabilize, some short-covering should aid near-term futures. August lean hog futures gapped lower to start the week, filled the gap, but then extended losses and posted a low-range close. Futures respected support at last week's low of $70.20.