CORN HIGHLIGHTS: Corn futures were again on the defensive today, losing 19-1/4 cents in nearby Sep closing at 3.66, while Dec closed 16-1/4 lower at 3.76-1/2. Dec 20 closed up 1/2 cent at 4.08. Bear spreading was again a primary feature as traders shed contracts after an extremely negative USDA report released yesterday in which, from expectations, acreage was higher, yield was higher, and demand lower. It was a triple whammy for the corn market which has now lost more than 40 cents in two sessions. Heavy liquidation and a gap lower on overnight trade after prices locked limit lower yesterday likely led to additional selling. Traders may have also been aggressively buying beans and selling corn on spreads as the bean report had a favorable tone. Wheat prices were again down in KC which will be acting as a potential competitor to corn. On the one hand, to summarize by just looking at the carryout number at 2.181 billion, it's likely large enough to suggest prices could lose another 25 to 50 cents. On the other hand, with a significant portion of the corn crop planted in June, the likelihood of a 169.5 yield may be challenged. Crop surveys and private estimates will continue to pour in the weeks ahead.
SOYBEAN HIGHLIGHTS: Soybean futures showed gains of 5 to 10-1/2 cents as Aug led today's rally closing at 8.72, also the high for the day. Sep closed 9-1/2 higher at 8.76-1/4 and new crop Nov at 8.89, up 9-3/4. Support from yesterday's USDA Supply and Demand report was noted today. The biggest figure of consequence was carryout which was 66 million bushels less than the average pre-report estimate as the August figure now is 755 million. July was 795 million. Beneficial rains in the forecast following the recent rains could keep rally potential in check. However, we continue to be somewhat concerned that the structure of the crop size is limited and that as we move forward weather the remaining weeks of August and all of September will be critical. This could mean high volatility. Yesterday's USDA yield at 48.5 bushels an acre wasn't necessarily a surprise, although some were looking for a reduction. Private estimates are suggesting 1 to 3 bushels less. This could be significant as carryout could drop under 500 million if that indeed does become the case. Futures lost ground yesterday but gained today for a net change of very little over the last two sessions. The 21-day moving average held prices in check today. Yet, from a longer-term perspective, the market is providing significant uncertainty from a technical perspective. A head-and-shoulders formation, still intact, would suggest a move down toward 8.20 Nov. Weather adversity could quickly run prices well above 9.50.
WHEAT HIGHLIGHTS: A spread in between Chi and KC was a primary feature again today as Sep Chi closed 1/4 higher at 4.72, while KC closed 8-3/4 lower at 8.83-1/2. Ample inventories are harder at winter wheat and tighter supplies of soft red winter are said to be keeping the spread at record level. The current spread between KC and Chi wheat is 76 cents premium Chi, a record. New news of consequence was lacking. Yesterday's big selloff on wheat was on the heels of the USDA report which did not show a decrease in world predicted carryout as anticipated. The market will likely now move in more of a sideways pattern as prices are likely too low to initiate farmer selling and hedging, while traders will likely be buying dips and selling rallies. Our point, we're running out of news in the wheat market.
CATTLE HIGHLIGHTS: Cattle markets closed sharply lower again today, with Aug lives down 4.50 to 100.55, Oct lives are down 4.50 to 99.25, and Dec lives are down 4.50 to 103.95. Aug feeders were down 6.67 to 127.72 and Sep feeders were down 6.75 to 127.20. Sellers were still active today on news that the Tyson plant burning down in KS would knock out 5%-6% of the nation's slaughter capacity. The closed processing plant will be a major pressure point for the cash cattle markets in the country but will also restrict beef production and therefore support beef prices. Choice beef values closed 2.25 higher yesterday afternoon to 218.62 and were up another 5.45 this morning to 224.07. The sharply higher beef values and incoming pressure in cash markets will keep packer margins extraordinarily strong and encourage a fast chain speed. The Oct live cattle contract opened near limit lower this morning, bounced as high as 100.92, and then sold off to settle at its limit down price for most of the session. Sep feeders opened moderately lower after yesterday's limit down day, found a bit of buyer interest, and then surged lower mid-morning to close at their limit down price.
LEAN HOG HIGHLIGHTS: Hog markets had a choppy session today, closing lower after testing some nearby overhead resistance levels. Aug hogs closed 17 cents lower to 79.00, Oct hogs were down 2.50 to 64.57, and Dec hogs were down 75 cents to 63.02. The CME Lean Hog Index was down 58 cents to 81.75. The China National Pig Index was up 2.57% last night, and is now up 7.1% for the week, up 14.3% for the month and up 64% year-to-date. China should start to become a major player for pork imports on the world markets sometime soon, but until the U.S. can push a steady stream of pork to other countries, near-term direction looks choppy. The best traded Oct contract tested its 10-day moving average resistance level today but quickly sold off, making today's session the third in a row with an unsuccessful test on the 10-day moving average. Oct hogs have not closed above the 10-day since July 26. Prices are not yet oversold, but a significant close or two above the 10-day moving average could spark some buying.