Julianne Johnston Pro Farmer Senior Markets Editor
From Pro Farmer
Updated as of 7:00 a.m. CT
Some of the reasons to be bearish corn are vanishing... After a sharp climb to new all-time highs in late June, corn futures saw a $2-plus profit-taking decline. Besides the need to take some profits, traders noted reasons such as crop improvement, the likelihood USDA would allow for a penalty-free CRP early-out, slowing demand and outside market pressures as behind the decline.
Some of those reasons are still there... crops are still improving according to USDA's weekly condition reports and outside markets are bearish. But the recent boost in export demand and news of ethanol plants reopening lines to buy more corn, as well as yesterday's CRP announcement, take some of the reasons to be "bearish" out of the market.
So, could the tide be turning for the corn market? It's possible. To signal a technical bottom, futures still have some work to do. Also, we'll keep an eye on the weather. If hot temps -- as predicted -- enter the Corn Belt next week, it could put pressure on the crop as it pollinates. There is still a lot of growing season left... Geez, I hope so anyway, we certainly don't need an early frost to take another nip out of production!
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Opening calls. These calls originate more than three hours before the open -- use caution, things change:
Corn: 1 to 3 cents higher. Nearbys were slightly higher, with some deferred contracts around 10 cents higher on USDA's decision not to allow a penalty-free early out on the CRP for the 2009 cropping season. After a weaker open yesterday, corn futures moved off session lows and turned higher in afternoon trade to post double-digit gains and bullish reversals. Early pressure came from sharp losses in the crude oil market, strength in the dollar and improvement in the condition of the crop. But corn futures were able to shrug all of that off, as traders turned their focus to demand.
Soybeans: Mixed. Futures were 3 cents lower to 2 cents higher overnight. Futures rebounded from sharp losses yesterday to close mostly 5 to 16 cents lower, which was near session highs. November soybean futures gapped lower yesterday but filled the gaps to hold in the short-term consolidation range. Resistance starts at Monday's high of $14.03 1/2 and extends to the top of the July 21 gap at $14.47. Tuesday's low at $13.53 is initial support.
Wheat: 3 to 6 cents lower. Futures were weaker overnight amid a lack of fresh news. Futures closed mostly mostly weaker yesterday, but well off session lows. Wheat faced heavy spillover pressure from neighboring pits and outside markets on the open yesterday, but as corn came off session lows and eventually pushed sharply higher, wheat trimmed losses to post a high-range close. Price action Wednesday will be largely dependent on what happens in corn, crude oil and the U.S. dollar.
Cash cattle expectations: Watching beef market. The beef market is showing signs of life, with Choice values up $1.92 and Select up 64 cents yesterday on solid movement of 293 loads. Strength in the beef market to start the week signals prices are back to levels that are attracting featuring and could stabilize the cash market later in the week.
Futures call: Firmer. Futures are called to open firmer on spillover from yesterday's gains. Futures benefited from late short-covering support yesterday as traders reevaluated positions. Upside potential in the early going was limited as traders still have the slightly bearish Cattle on Feed and Cattle Inventory Report on the minds. October live cattle posted an upside day of trade on the charts to finish in the upper quarter of the daily range. Futures need consecutive closes above the $106.00 level to signal a near-term low has been posted.
Cash hog expectations: Mostly steady. Cash hog bids were steady at most locations yesterday, although there were some scattered firmer bids. Traders anticipate cash strength waning, however, as most packers have this week's needs largely covered. Packers may lower cash bids in an attempt to boost cutting margins, which remain in the black, but are down considerably from recent levels.
Hog futures: Mixed. Futures are called to open mixed on the possibility of short-covering following yesterday's losses and move off session lows in most contracts. October lean hog futures violated uptrending support from the July 8 low and also dropped below the 40-day Moving Average. Today's low at $71.35 is key near-term support. A drop through that level would confirm a short- term top and open the downside to the July 1 low at $68.40. To the upside, last Friday's high at $74.50 is solid resistance.