The grain and oilseed markets traded mixed in the overnight session and remain volatile ahead of the World Supply/Demand report out this morning at 11:00 am (CDT). The average trade estimate for corn yield is 164.7 bu/ac, compared to the July USDA estimate of 166.8 bu/ac. This would still be the second highest yield in U.S. history, behind last year’s 167.4 bu/ac. Brazil’s CONAB raised their 2014/15 corn production to 84.3 million tonnes, compared to last month’s 81.8 million tonne estimate. U.S. Dollar index down sharply to 96.43 and the DJIA lost 212 points Tuesday in the wake of China’s RMB devaluation. September corn futures lifted 2 cents to $3.785/bushel just after dawn Wednesday, while December gained 2 cents to $3.895.
Unpredictability marks the oilseed complex on the heels of what is being called a “currency war” with China, and ahead of USDA report this morning. Trading was mixed overnight. The average trade estimate for soybean yield is 44.8 bu/ac, compared to the July USDA estimate of 46.0 bu/ac. This would still be the second highest soybean yield in U.S. history, behind last years’ 47.8 bu/ac. Brazil’s CONAB kept their soybeans harvested 2014/15 at 96.2 million tonnes, steady from their estimate last month. September soybeans lost 2.75 cents to $9.7825/bushel early morning Wednesday, while September soyoil lost .26 cents to 29.89 cents/pound and September meal gained $2.30 to $344/ton.
CBOT wheat futures were mostly higher early Wednesday morning after falling 3.52% Tuesday and rising 2.9% Monday. The fundamentals for wheat still look quite bearish. Chicago wheat hit a near-term high of June 30 and appears to have bottomed on Aug 3 at $4.99. Nearby futures are currently 19 cents below the 50-day moving average and just 4 cents under the 100-day moving average. September CBOT wheat futures lost 18.25 cents to $5.0725/bushel early Wednesday, while Sep KC wheat dropped 17.5 cents to $4.88/bushel, and September MWE lost 15 cents $5.1925.
After bottoming two weeks ago, live cattle have risen every day except for two, so Tuesday’s drop wasn’t surprising. While the cattle market does appear to be in a seasonal shift higher that could see it rise to the historical average of 13%, futures seldom move straight up, instead, ratcheting and consolidating over a longer term with an upside trend. Competition from other meats may add pressure but the uptick in buyer interest is likely adding support nearby. Nearby cattle October closed a cent higher than the 50-day moving average and 3 cents below the 100-day moving average. October cattle lost 0.27 cents to 149.15 cents/pound Tuesday, while February futures fell 0.17 cents to 149.92. Meanwhile, October feeder cattle futures gained 0.07 cents to 208.17 cents/pound, while January feeders lost 0.05 cents to 200.60.
Lean hogs traded mostly higher Tuesday after falling for the last four days, in part due to support from futures trading at a discount to the lean hog index. Carcass values, however, continue to slip, thereby likely reflecting the end of BLT season and pork belly losses. Some analysts predict that reports this week will reiterate record-large August 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. October hog futures closed .35 cents lower to 62.35 cents/pound Tuesday, while February gained 0.15 cents to 65.22.
ICE cotton futures were lower again early Wednesday ahead of the report and have been lower each day for nearly the last two weeks; clearly a seller’s market for the bearish crop. The average trade estimate for cotton production is 14.78 million bales, compared to the USDA July estimate of 14.50 million . Good cotton crop ratings overall 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 the USDA will make to production estimates. The consensus is that production will be robust and ending stocks will be higher. December cotton futures edged .28 cents lower to 61.54 cents/pound early Wednesday, while May dropped 0.51 cents to 61.81.