Pro Farmer Market Snapshot: Corn Rallies to Session High

Pro Farmer ( Pro Farmer )

Corn futures have rallied to new session highs this morning after a choppy trade overnight.

  • Prices opened higher last night but failed to rally above Tuesday’s high or hold a small gain above the 100-day moving average at $4.15. Buying re-emerged this morning after the reopening pushing prices close to key resistance at $4.20 to $4.22 ½.
  • Underlying support stems from trade expectations for USDA to cut the size of the U.S. crop in the Aug. 12 update. Traders polled by Reuters forecast corn production would fall to 13.193 billion bushels, down from 13.875 projected by USDA in July.
  • The U.S. Midwest weather forecast had no major changes over the next 10 days, with below average rainfall, especially in the east, with temperatures average to below average. Scattered rain will stay in the Central Plains and southwest Midwest into the weekend. A warmup late next week may a help to trigger some storms in the Midwest but forecasts that far in the future have not be verifying.
  • The China yuan regained some ground on Thursday as China's central bank set its official midpoint firmer than market expectations, signaling an intent to stabilize a decline in the currency.
  • Fears of a further escalation in U.S./China trade tensions has helped to support strong global stocks markets and provided support to some commodity markets.
  • Corn export sales totaled just 42,600 MT for 2018-19 and 197,000 MT for 2019-20 the week ending Aug. 1.

Soybean futures surged to a one-week high, up 14 to 17 cents at midsession. Soymeal futures are $2.50 to $3.00 higher and soyoil is up about 60 to 70 points at midsession.

  • November beans opened about steady and drifted slightly lower before stabilizing and turning back to the upside. Buying accelerated as prices rose above Monday’s high and chart resistance at $8.75.
  • Soybeans are firming amid uncertain U.S. production ahead of the USDA’s Aug. 12 first survey-based estimates and updated acreage data from 14 mostly Midwest states.
  • Soybean production may fall between 3.633 billion and 3.974 billion bu., with an average of 3.800 billion bushels, a Reuters poll showed. In July, USDA projected a 3.845 billion bu. bean crop.  
  • The dry spots of western Iowa, Illinois and Indiana will be dry until Sunday. Starting Sunday and through Thursday, two fronts will come through, bringing scattered rain with forecasters divided about amounts.
  • USDA daily export announcement service said private exporters reported new export sales of 135,000 metric tons (MT) of soybean meal for delivery to the Philippines during the 2019-20 marketing year.
  • Meanwhile, China's soybean imports came in at 8.63 MMT in July, the highest monthly total since August 2018, according to data released by the General Administration of Customs on Thursday. That’s up from 8.0 MMT a year ago and 33% higher than June imports
  • Malaysian palm oil futures extended gains for the fourth straight session to touch an over three-month high on Thursday. Soybean oil prices followed on speculation China will need to import more vegetable oils to make up for smaller crushing.

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 Wheat futures are down a penny to up 6 cents. Spring wheat futures are narrowly mixed.

  • SRW futures are following corn to the upside, but HRW are struggling with worries about increased export competition. SRW are up against the 100-day moving average and a close above that level is needed to attract new buying interest. 
  • Prices remain on the defensive amid plentiful global supplies of wheat, an obstacle for U.S. export prospects. A firm dollar has also made U.S. supplies less competitive.
  • Futures found light support from weekly USDA export sales rising 17% above the prior four-week average and near the top end of trade estimates.
  • The S. attaché in Argentina is calling for a 2019-20 wheat crop of 20.8 MMT, which is 800,000 MT higher than USDA’s official crop projection and a record, based on a larger planted acreage projection.
  • Saudi Arabia's state grain buyer SAGO said that all Black Sea origin wheat and other global origins can be offered in its next wheat tender if crops meet specification requirements. This may hurt EU exports and lead to moves to gain market share in other markets.

Live cattle and feeder cattle futures are slightly to moderately higher, adding to Wednesday’s rallies.  

  • Futures are firmer after a rally in beef prices this week.
  • Still cash cattle trade is mixed and will need to lead futures higher.
  • Weekly beef export sales in the week ended Aug. 1 rose 94% from a week earlier and were 41% higher than the prior four-week average. Top buyers were Hong Kong, Japan and South Korea. Shipments were up 8% from the four-week average.

Lean hog futures are mixed to higher, with front months erasing earlier gains.  

  • Futures bears are testing the resiliency of Wednesday’s recovery.
  • USDA said pork export sales last week rose 55% from the prior week’s anemic tally but were down 13% from the four-week average. China bought just 1,400 MT last week. Shipments remains relatively active with China the top destination.
  • China on Thursday confirmed a new case of African swine fever in south China's Guangxi Zhuang Autonomous Region. The disease was detected in a truckload of pigs at a highway toll station in the city of Fangchenggang of Guangxi.
  • Average cash hogs fell $1.51 yesterday and pork cutout values were down 33 cents as losses in hams, loins and butts offset gains in bellies, ribs and picnics. Sales were sluggish.
  • Slaughter this week is estimated at 1.376 million head, up from 1.313 million a year ago