#Grains trade firmer so far in follow up to a bearish report day. December corn futures work to keep support from $3.50 as $9.50 props up November soybeans.
#USDA issued yield estimates for corn at 169.9 bushels per acre versus 174.6 last year and for soybeans at 49.9 bpa versus 52.1 in 2016. Tuesday’s crop report has some still shaking their heads and calling the new yield numbers still too high while others are moving over to the side of the USDA and expecting that big crops will get bigger. Most all are trying to reconcile the imbalances among private field observations, crop condition ratings, and the government survey estimates.
#More traders look ready to accept that the soybean crop is as big as the government analysts suggest, but instead of selling on supply worries, they are choosing to focus on demand optimism. Export demand is running better than expected into the fall with China an active buyer. A favorable shift of support for domestic biodiesel producers also helps improve usage potential.
#Fund traders left report day with an estimated net corn short near 120,000 contracts. The managed money soybean position is net bearish by 30,000 contracts. A net-short of 80,000 Chicago wheat contracts is thought held by the funds.
#A storm system moves through the Eastern Corn Belt today but should provide light showers to parts of Illinois. Another system is expected to drop rains over the upper Plains at the end of the week. The 6-10 and 8-14 day maps show the Mid-South drying out to help harvest efforts while the Midwest receives a few more finishing rains. The two-week outlook is biased mostly warmer, so a frost/freeze threat does not look immediately imminent.
#Oil prices are helped this morning by a government report that was bullish on the forward outlook for demand. The weekly report on supply will be released later this morning.
#The dollar remains on the defensive against most major currencies, weakening as traders price in a dovish stance from the U.S. Fed and indications of improved economic health abroad. Grain export programs stand to benefit if the dollar falls further against currencies held by our competitors.
***** Live cattle futures look poised for a better open; feeders flat to $0.47 lower; hogs face technical pressure at the start. *****
#Cattle futures will likely find today’s guidance from the cash trade. The Fed Cattle Exchange has just more than 1,000 head up for auction. Most cash activity has been observed at $106 and above so far this week.
#Hog traders will also put a sharp focus on the cash fundamentals this week now that futures have widened their discount. But, the technicals are still very much also in play after October futures gapped lower on Tuesday.