Grain and livestock futures were mixed early Wednesday.
Soybeans Try to Hold Early Gains
Greg McBride with Allendale, Inc. says soybeans started the day session higher with some short covering and adding a little weather premium due to dry forecasts for the last half of August.
He says soybean oil was also higher early following crude oil which was supportive and their may have been some optimism tied to President Trump saying the U.S. and China were close to a deal.
However, McBride says the two sides are actually close to a deal to extend the tariff truce beyond the Aug. 12 deadline.
“So I am discounting that as a supportive factor for the market,” he says.
Soybean Demand Concerns Linger
McBride says soybeans are struggle to hold gains on any rally with corn and wheat making new lows but also because of demand concerns.
Soybean exports for the new crop season are at 20 year lows and China has not bought any soybeans from the U.S. even when prices were cheaper than South American soybeans.
So he thinks November soybeans may have to fall to the $9.70 to $9.75 areas without that export business returning.
Corn Continues the String of Contract Lows
Corn is making new contract lows again on Wednesday and December took out the $4 mark under the weight of strong crop ratings and higher yield estimates from private firms.
S&P Global is at 186 bushels with StoneX at 188.1 but McBridge thinks the market has already worked in a 184 to 185 yield.
Pressure in Corn Isn’t Just About Yield
McBride says the pressure in corn is also tied to farmer selling as producers have to clear old crop corn out their bins before harvest or make sales ahead of first notice day on the September contract.
“These bushels are hitting the market and causing basis levels to widen out as well,” he says.
Wheat Tries to Bounce Off Contract Lows
Wheat tried to bounce early off of contract lows in both classes of winter wheat again overnight as the dollar has eased.
However, the market is having a tough time holding with corn hitting new lows and with rains falling in dry areas of Canada.
Cattle See Profit Taking Awaiting Cash
Cattle futures were lower early in the session after making new contract and all-time highs on Tuesday, at least in the nearby contracts.
McBridge says the market is seeing some light profit taking awaiting cash trade development for direction.
