Week Starts with Tariffs and Weather and Ends with USDA Report
Aug 06, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for August 6, 2018.
Grain markets are drifting as trade war retaliations hit the headlines. However, Friday’s USDA report will be important to this week’s trade. USDA will provide yield and production estimates for 2018 row crop. Crops saw stress this past week in areas which missed the rain. Northern Missouri and southern Iowa has had no significant rain in a month.
Crop conditions report this afternoon has traders expecting a decline in the good/excellent by 1 to 2% in corn and unchanged to 1% lower in soybeans.
August USDA Supply and Demand Report will be released on Friday at 11:00 am CDT. The trade will be watching for how much USDA raises yields. Allendale is estimating a 177 bpa for corn, Informa is at 176 bpa INTL FC Stone is at 178.1 bpa for corn and USDA last month was using 174.0 bpa.
Allendale is estimating a 51.2 bpa for soybean production on Friday’s report, Informa 50.0 bpa, INTL FC Stone is at 50.0 bpa and USDA last month was at 48.5 bpa.
CFTC Commitment of Traders Report showed managed money funds were net buyers of 77,999 contracts in corn reducing their net short positions to only 52,198 contracts. They were net buyers of 2,644 contracts of soybeans and 28,990 contracts in wheat.
Funds on Friday were estimated have been net buyers of 11,000 corn, 6,000 soybeans and 3,000 soyoil. They were net sellers of 5,000 wheat and 2,000 soymeal.
Australia announced a $140.56 million aid package for drought-afflicted farmers as much of east coast suffers the worst dry spell in their living memory.
Live cattle futures were 2.05 in August and 1.52 higher in the October contract last week. Lean hogs were another 5.15 lower for the week and the fourth consecutive week with large losses. The August futures still remains 10.50 below the hog index. The October lean hog futures were down only .10 for the week.
Managed money funds were net-buyers of 5,716 contract in live cattle making them long 54,274 contracts. Funds were net sellers of 4,841 in lean hogs making them net short 7,841 contracts.
Fed cattle traded at 114 in the south late on Friday. Today is first notice day for August live cattle contract after the close. August cattle futures close at highest level since March 15, 2018. Resistance crosses at 112.15 and support comes in at 108.00.
August lean hogs continue to be pressured by long liquidation ahead of last trading day. October contract has support at 49.35 and resistance at 52.42 (20 day moving average).
Dressed beef values were mixed with choice up .95 and select down .01. The CME Feeder Index is 148.92. Pork cutout value is down 1.56.