Corn prices are expected to open 2 to 4 cents lower on Wednesday. Corn trading was very quiet overnight but prices managed to decline slightly after the solid gains on Tuesday. Weather forecasts still call for good chances for rain throughput the Midwest by early next week, however, some of the dry Southern areas are expected to stay dry which will provide some support to prices, especially near term. The stock market fell on Tuesday adding pressure to commodity markets, but Dow Jones futures were up a few points in overnight trade. As is always the case at this time of year, a shift in the weather forecast could significantly drive prices.
Soybean prices are expected to open a little higher on Wednesday. Overnight soybean trading was light and prices stayed in a pretty narrow range. At least for now the weather in the key growing region is okay but certainly not ideal. It has been pretty dry through the central Midwest but forecasts call for rain by early next week. Weather conditions will become increasingly critical as the calendar turns over to August. A modest uptick in the Dow Jones futures index overnight could lend support to early session soybean prices.
Wheat prices are expected to open steady to a little lower on Wednesday. Wheat prices were mixed overnight with slightly higher prices in Kansas City and slightly lower prices in Chicago. Reports from the first part of the spring wheat crop tour shows yields about 3.5 bushels per acre below year ago levels for the same parts of the growing region. This is not too much of a surprise since yields last year were so high. There was little other news to drive wheat prices. Expect wheat price direction to be influenced by what happens in the corn and soybean markets.
Cattle futures prices are expected to open steady to a little lower on Wednesday. The cattle market outlook is unsettled to start Wednesday morning. Cattle futures prices posted solid gains on Tuesday, with the rally fueled by spill-over from the grain markets and some improvement in boxed beef prices. On the other hand, about 20,000 head of cattle were sold on Tuesday at $107 per cwt, down $1 from the previous week. The confusion about price direction may delay more activity in the cash market until Thursday. There may be progress on the debt ceiling stalemate but the uncertainty about future demand is still there and that uncertainty has some traders closing out positions and moving to the sidelines. If a debt ceiling deal is reached, commodity markets in general should get a boost.
Hog futures are expected open steady to a little higher on Wednesday. Hog futures prices declined on Tuesday due in large part to news that pork prices declined last week. Futures traders have been counting on big pork sales to China to support the market. We can still see the big sales to China, but the easing of pork prices there threw some cold water on the idea. Despite the lower closes on Tuesday, hog futures rebounded significantly from early session lows. On the plus side, the pork cutout surged to an all-time high on Tuesday, exceeding $101 per cwt. Cash hog prices also rose on Tuesday to nearly $98 per cwt.
Cotton prices are expected to open higher on Wednesday with followthrough buying. Cotton prices turned higher on Tuesday with all contracts posting big gains. The gains were primarily a technical correction after the market declined steadily and dramatically since early June. From a technical standpoint the market is at a critical point. The downtrend line could be broken with another strong price gain on Wednesday. With the drop in prices over the past six weeks, it is possible that we are seeing some recovery in cotton demand. Trading over the next few days could provide important information about the direction for the cotton market into the fall.