What Traders are Talking About:
Overnight highlights: As of 6:00 a.m. CT, corn futures are trading 1 to 3 cents lower, soybeans are 1 to 11 cents higher with the November contract at the low end of that range and wheat futures are mixed with an upside lean. Midday weather updates will dictate how soybeans and especially corn, close out the week. Cattle futures are expected to be light and choppy this morning ahead of USDA's Cattle on Feed Report, while hogs are expected to trade higher.
* Relief on the way. Forecasts call for a break from the recent hot, humid weather as cooler air pushes into the Corn Belt. Along with the cooler air will come some increased rain chances over the next 10 days. Based on weather models, it appears the best chance for rains over the 10-day period is from the eastern third of Iowa eastward. Far western areas of the Corn Belt should see some moisture, but those rains are expected to be lighter and spottier, though the most recent maps feature improved rain chances for Nebraska, Kansas eastern South Dakota and western Iowa. Cooler temps appear likely, it's the rain amounts and coverage that will be the key to the coming relief.
The long and short of it: Traders view the forecast as crop-friendly, price-negative. But those attitudes could change if forecasts shift and/or rains are lighter than advertised.
* Extended weather outlook gives little guidance. The National Weather Service 30- and 90-day weather outlooks for the Corn Belt are about as noncommittal as it gets -- a virtual "punt" on the temperature and precip forecasts. Equal chances of normal-, above-normal and below-normal precip and temps are forecast across the bulk of the region for August through October. On the temperature maps, a large mass of above-normal conditions is expected to the west of the Corn Belt, with the warmer-than-normal readings expected to creep into Nebraska and Kansas. Otherwise, the rest of the Corn Belt has "equal chances" on temps. On the precip maps, "equal chances" encompass the entire Corn Belt, though there's a big bubble of above-normal rainfall forecast to the southeast of the region.
The long and short of it: The extended outlook leaves the possibilities for weather the remainder of the growing season wide open, suggesting there is likely to be multiple mini weather events instead of an established pattern over the coming three months.
* Cattle on Feed, but no Cattle Inventory. USDA's monthly Cattle on Feed Report this afternoon will continue to show a feedlot inventory well under year-ago. As usual, traders will focus on the Placements category, which is widely expected to come in under year-ago as improved pasture conditions for most areas led to fewer animals being moved into feedlots. The average trade guesses put On Feed at 97%, Placements at 94.9% and Marketings at 94.7% of year-ago. USDA would also normally release its Cattle Report at this time, but the mid-year update became a casualty of budget cuts this year. The report would have showed a smaller cattle inventory, a smaller calf crop and a modest increase in beef heifer retention compared to year-ago.
The long and short of it: Traders will be hesitant to add new positions ahead of the Cattle on Feed Report, but barring any major surprises, focus will remain on cash market fundamentals as the cash cattle and boxed beef markets try to put in short-term lows.
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