TOP STORIES:
Corn Slides on Signs of Larger Supply
Corn for December delivery fell 1.4% to $3.30 a bushel on the Chicago Board of Trade Tuesday, as upticks in crop quality reported by the USDA late yesterday shows that 2020 crops will likely be robust, even with hot and dry weather creeping into the Corn Belt in the past few weeks.
The USDA reported in its weekly progress report late yesterday that the U.S. corn crop is at 72% good or excellent condition, up 3 points from last week. Soybeans were also up 3 points to 72%, and spring wheat conditions improved 2 points to 70%. "The improvement was greater than expected," said Karl Setzer of AgriVisor. "[The] trade is taking this as a sign of high-yield potential." For traders hoping for hot weather to eat into otherwise ample U.S. grain production, the quality improvements were a bearish development.
Grains Turn Lower Amid Quality Improvement -- Market Talk
09:19 ET - The uptick in crop quality reported by the USDA in its weekly progress report late yesterday has grain futures down pre-market. Corn is down 1.1%, soybeans off 1.3%, and wheat is falls 0.3%. In the report, the USDA pegged the US corn crop at 72% good or excellent condition, up 3 points from last week. Soybeans were also up 3 points to 72%, and spring wheat conditions improved 2 points to 70%. "The improvement was greater than expected," says Karl Setzer of AgriVisor. "[The] trade is taking this as a sign of high yield potential." For traders hoping for hot weather to eat into otherwise ample US grain production, the quality improvements are a decidedly bearish development. (kirk.maltais@wsj.com; @kirkmaltais)
STORIES OF INTEREST:
Flash Soybean Sale to China Absent -- Market Talk
11:37 ET - The USDA has not announced any new flash sales of soybean exports today, breaking the streak of 11 straight days of export sales of over 100,000 metric tons announced by the USDA. For soybean futures in particular, the effect of these large sales on futures movement has diminished. "Those sales have become a bit routine, so its had little market impact," says Tomm Pfitzenmaier of Summit Commodity Brokerage. Soybean futures on the CBOT are down 1.8% Tuesday. Meanwhile, corn futures are down 1.4% and wheat is off 1.2%. (kirk.maltais@wsj.com, @kirkmaltais)
Grains Volatility Expected Ahead -- Market Talk
12:50 ET - Grains traders expect that CBOT futures could show increased volatility in the near term, as commodities as a whole try to find their footing as coronavirus sees a resurgence in certain states. "Both producers and end users need to be aware of the risks of price moves in either direction driven by money flow as it searches for those markets that have the best opportunities for movement, and then correct quickly when if it realizes that asset was a miss, but surge quickly as well if resistance is lacking," says Arlan Suderman of StoneX. "There will be some trial and error. Be prepared for volatility." Grain futures are down today, led by soybeans which are off 1.7%. (kirk.maltais@wsj.com; @kirkmaltais)
THE MARKETS:
Hog Futures Finish Lower as USD Rises -- Market Talk
15:23 ET - Lean hog futures on the CME finished slightly lower, down 0.1% at 50.725 cents per pound. For hogs, one reason for the decline may be following the US dollar. The USD index trading on the Intercontinental Exchange broke a seven-session decline in trading Tuesday, with traders wondering if a recovery in the USD's strength spells trouble for commodities reliant on export demand, like pork. "US trade with China remains key for the remainder of the year and the Yuan Renminbi is managed by Chinese officials," says Steiner Consulting Group. "Rather, it is political calculations that will determine the path of US exports to China in the second half of the year." Meanwhile, live cattle futures finished up 1.1% at $1.05 per pound. (kirk.maltais@wsj.com; @kirkmaltais)
