The grains are steady to slightly higher Friday before the open. Corn has posted new highs for the year and has reached price levels from last July. Markets await the USDA Supply and Demand report (WASDE) due out at 11am this morning. The trade is expected corn yields at 165.1 bu/ac, compare to 166.8 from the USDA in June and production of 13.395 billion bushels vs 13.630 from the USDA in June. South American corn will also be a key data point to watch. Brazil’s CONAB raised their corn forecast to 81.81 million bushels from 80.21 last month. September corn futures climbed .75 cents to $4.2975/bushel before the open Friday morning, while December added 0.75 cents to $4.3975.
Just hours before the WASDE release, soybeans are lightly firmer in anticipation of how the government will change the balance sheets in light of the impact of excessive rains on acreage and yields. The trade is expecting average bean yields at 45.1 bu/ac and U.S. production of 3.794 billion bushels. This compares to the USDA June estimates of 46.0 and 3.830, respectively. Markets will also closely watch South American soybean forecasts to get firmer picture of world stocks. Brazil’s CONAB raised their soybean forecast to 96.22 million bushels. August soybeans climbed 5 cents to $10.3125/bushel at before the open Friday, while August soyoil advanced 0.19 cents to 32.56 cents/pound and July meal lost $.1 to $363.90/ton.
U.S. winter wheat harvest conditions as well as weather issues in the EU and Canada have kept wheat futures supportive in the overnight session ahead of the USDA report due out today. Egypt bought 180,000 tonnes of Russian and Ukrainian wheat and Frances soft wheat crop is estimated to be 1.1% higher than last year at 37.9 million tonnes. U.S. 2014/15 wheat stocks are expected by the trade to be 855 million bushels, up 5% from the June USDA forecast of 814 million bushels. September CBOT wheat futures gained 5.25 cents to $5.83/bushel early morning Friday, while Sep KC wheat rose 4.25 cents to $5.835/bushel, and September MWE advanced gained 3 cents to $6.22.
Downward pressure remained on the livestock complex Thursday as traders keep low demand and increased feed costs on their radar. Cash beef continues to slide lower in what might be considered a not-too-unusual decline for this time of year. Fund and as well as larger commercial interests may also be liquidating some longs ahead of today’s WASDE. Nearby cattle futures have largely stayed below the 40-day moving average since the run up to the June 30 Stock report. Prior to the week of June 25, they had not sunk below the average since early March. August cattle dropped 0.17 cents to 148.47 cents/pound Thursday, while December futures lost 0.5 cents to 153.85. Meanwhile, August feeder cattle futures lowered 0.7 cents to 211.75 cents/pound, and November feeders fell 0.97 to 207.55.
Despite strength in the lean hog index, lean hog future declined Thursday. Large gains in the grain markets today may also have producers attempting to realign their outlook for costs, particularly if weather concern materialize into a more significant bull run in corn and soybeans. Although August futures have rallied in the past week, Thursday’s losses appear to be part of a bigger trend line lower that began mid-May and may be tied in part to follow-through trading on the prospects of larger second-half supplies. August hog futures lost 2.65 cents to 73.27 cents/pound Thursday, while December slid 2.82 cents to 59.97.
ICE cotton futures were firmer overnight ahead the report out today. The trade expects production, exports and U.S ending stocks to all be lower than what the USDA forecast in June. It expects production at 14.37 million bales, vs 14.5 in June, exports at 10.68 million bales, vs 10.70 in June, and ending stocks of 4.13 million bales, vs 4.40 in June. December cotton futures lifted 0.75 cents to 66.61 cents/pound, while May advanced 0.76 to 66.58.