Corn futures have improved to post gains in the teens to 20s in the September through July contract.
- High winds and rain associated with Hurricane Isaac could lead to further yield destruction in the central Corn Belt as stalk weakness is a common problem this year. This has shifted attention away from demand destruction for the time being.
- High prices are thought to have curbed export demand. Traders will be able to gauge the extent of this via the Weekly Export Sales Report tomorrow morning.
- Outside markets are a mixed bag, with the dollar and stock market enjoying slight gains while crude oil futures are under pressure.
Soybean futures have surged to post gains in the teens to 20s with nearbys leading to the upside.
- Much of the Corn Belt is unseasonably warm and dry at present, which is stressful for filling beans.
- Plus increased export activity of late signals more price rationing may be needed to stretch tight supplies. The American Soybean Association’s director for southeast Asia expects the region’s imports to to increase by at least 12% to 2.9 million metric tons (MMT) in the marketing year beginning Sept. 1.
- Traders will watch the export sales report tomorrow for an additional gauge of demand.
- However, the China National Grain and Oils Information Center says China’s soybean inventories are a record 22 MMT -- enough to offset a decline in imports if needed.
Wheat futures continue to rally with Chicago wheat posting gains in the 20s to 30s, and Kansas City and Minneapolis wheat 20-plus cents higher.
- Wheat is enjoying some corrective short-covering around speculation Russia may announce export curbs following a meeting on the grain situation on Friday.
- The developing El Nino weather pattern also keeps production concerns in western Australia close at hand.
- Meanwhile, a slew of wheat export activity today points to increased wheat buys due to lofty corn prices and a tightening global supply picture.
Live cattle futures are posting sharp gains in nearby contracts, with deferred months moderately higher. Feeder cattle futures are slightly to moderately higher.
- Early profit-taking gave way to bargain buying. This escalated as buy stops were triggered. August futures are now trading in line with last week’s cash cattle trade.
- Deferred contracts are benefiting from expectations supplies will tighten down the road.
- But additional upside potential is likely limited as beef demand is expected to moderate following the Labor Day holiday.
- This morning Choice boxed beef values slid 31 cents and Select cuts dipped a dime, but movement surged to 134 loads.
- Feeder cattle futures are enjoying spillover from live cattle, though strength in the corn market is limiting the market’s upside.
Lean hog futures have improved to post slight to moderate gains in most contracts.
- Lean hogs are benefiting from some light short-covering on ideas the downside has been overdone and the steep discount nearby contracts hold to the cash hog index.
- But this is the extent of buying interest as supplies are building, which has pressured both the pork and cash hog markets.
- Hopes more stimulus measures lie ahead for the U.S. and Europe are also mildly supportive as it would point to improved red meat demand ahead.
