Corn futures eased 1.6% overnight after rising 4.69% Monday in expectation that the USDA will reduce corn production. The corn crop condition rating came in better than expected yesterday by not dropping 1 point to 69% good to excellent as analysts expected. The crop was rated 70% good to excellent, compared to 70% last week and 73% last year. This surprise, along with what appears to be a little less severe dry/hot weather outlook in the 6 to 10 day forecasts seem to be mitigating bullishness. September corn futures dropped 6.25 cents to $3.84/bushel just after dawn Tuesday, while December fell 6.25 cents to $3.9475.
Soybean futures retreated over 1.1% in overnight trading after gaining 3.5% Monday as the market added a premium on expectations of lower production in the WASDE. The USDA reported yesterday afternoon that the soybean crop rating held steady at 63% good to excellent, likely discounting some of Monday’s gains in the overnight session. The question now remains whether the USDA’s surprisingly optimistic crop ratings will also translate to a less than expected yield reduction in the WASDE. September soybeans retreated 12 cents to $9.9625/bushel early Tuesday, while September soyoil lost .44 cents to 30.05 cents/pound and September meal dropped $3 to $350.60/ton.
The wheat complex eased early Tuesday morning after rising sharply with corn and beans yesterday. Winter wheat harvest was reported to be 97% complete, compared to 93% last week and the 90% five-year average. Spring wheat is 28% harvested, compared to 8% last week and the 20% five-year average. The spring wheat condition rating was shown to be 69% good to excellent, compared to 70% last week and 70% a year ago. September CBOT wheat futures surged 15 cents to $5.255/bushel Monday, while Sep KC wheat advanced 9.75 cents to $5.045/bushel, and September MWE firmed 9.25 cents $5.3425.
It now seems readily evident that live cattle recently hit a seasonal low as futures closed higher Monday, following cash beef values to 1-month highs. Choice cuts were up 1.15 cents to 236.34 and select cuts were up 1.75 cents to 230.14. Buyer interest has picked up ahead of the Labor Day demand increase and data suggests that, on average, post-summer cattle values have risen 13% to their fourth-quarter highs, thereby suggesting more support ahead. Nearby cattle settled about 1 cent above the 50-day moving average and just under 3 cents below the 100-day moving average. October live cattle gained 0.77 cents to 149.30 cents/pound Monday, while February futures rose 0.35 cents to 150.02. Meanwhile, October feeder cattle futures fell 0.22 cents to 210.37 cents/pound, while November feeders lost to 206.12.
Lean hogs corrected for the fourth straight day Monday, hitting 3-week lows despite steady cash hog values. Analysts predict reports this week will reiterate record-large pork production, dampening recent bullishness in the pork market. Reponses from PEDv last year that included the holding back of breeding stock may have caused producers to overcorrect. Conversely, increased demand for “the other white meat” as a substitute meat may help limit downside action this week and possibly provide support. October hog futures closed 1.22 cents lower to 62.97 cents/pound Monday, while February lost 0.30 cents to 66.20.
The cotton market traded steady-lower Monday after trading lower for five straight days as funds appear to be selling ahead of the WASDE on the basis of a great outlook for the U.S crop on top of already ample supplies. Good cotton crop ratings and broader supply issues are converging to form a bearish outlook for the cotton market. Traders await the WASDE release this Wednesday to see what revisions, if any, the USDA will make to production estimates. The consensus is that production will be robust. December cotton futures edged .01 cents higher to 61.80 cents/pound Monday, while May lost 0.10 cents to 62.41.