Equities turned midday from higher to lower. Hope for more stimulus and Covid-19 vaccines seems to be starting to not feed the bull. Presidential candidate Joe Biden picking his running mate in California Senator Kamala Harris seems to have little impact on the markets Tuesday afternoon/evening. This may change in the Tuesday overnight into Wednesday, but only time will tell.
Precious metals hit a wall and saw sharp profit taking start Tuesday. Gold dropped more than $100/ounce on the open. Gold has lost nearly $200/ounce in the last 3 trading sessions.
In the currency trade the US Dollar index resumed it’s decline on Tuesday dropping -0.16% on the open and closing roughly unchanged. The Brazilian real was able to keep moving higher ending about 1% higher. The Russian Ruble is not reacting as quickly as the Real ending only 0.55%.
Grains traded mixed most of Tuesday. It appeared though that funds were trading the grains traditionally ahead of a WASDE report, buying soybeans and selling corn. Fundamentally though there is a story for grains after strong winds ripped across Eastern Nebraska, Iowa and Western Wisconsin on Monday. The strong winds called a derecho were as strong as an inland hurricane and left plenty of destruction in their path. Social media is filled with photos of destroyed grain bins, equipment shed and down row crops. This may take several weeks to show up in crop condition ratings and may cause some to take the August WASDE report with a grain of salt. The Monday crop progress report showed a small decline in the national corn conditions, which is common this year. Soybeans improved another 1%, which could place more pressure on the market.
USDA has announced flash sales the first two days of the week. The first sale on Monday was 111,000 MT of soybeans sold to unknown destinations for the 20/21 marketing year. The second 324,000 MT of soybeans sold to China for the 20/21 marketing year. This helped to bolster soybean buyers throughout the day. Tuesday saw a lone sale of 132,000 MT of soybeans to China for the 20/21 marketing year.
Tuesday morning FOB soybean prices at the US Gulf were 68 cents cheaper than comparable prices in Brazil.
USDA export inspections for last week were also strong for corn (1.15 MMT) and soybeans (635,665 MT). Looking at year ago levels though both grains are well behind.
USDA on Monday also reported 264,000 MT of soybeans received for delivery to China for the 20/21 marketing year.
US China tensions are still very hot and continuing to grow. China has placed sanctions on 11 U.S. citizens in a tick for tack response to U.S. sanctions on 11 Chinese officials in Hong Kong. China also arrested Hong Kong media mogul Jimmy Lai over the weekend under new security laws. This will likely invoke a response from the U.S. and may be part of the reason for the swiftness in Lai’s arrest.
The livestock sector continues in mixed fashion. Cattle are near levels of technical resistance. Lean hogs are in the middle of their channel trying to establish direction. The recent triple digit support in lean hogs through seems to have sparked more follow through support. The sharp run up in hogs though can cause a case of what goes up must come down.
In the country there was scattered trade reported in parts of Kansas at $103, $3 higher than last week’s weighted average. The rest of country remains quiet late Tuesday afternoon. Asking prices are around $105 in the South, and $168 plus in the North.
For the week ending August 01, 2020, Imported Beef Passed for Entry in the U.S. totaled 43,077, 93.36% of the previous week and 104.88% of the 4-week average.
Expected Slaughter numbers Tuesday
119,000 hd today 119,000 hd wk ago 117,324 hd yr ago
479,000 hd today 475,000 hd wk ago 475,448 hd yr ago
Midday Carcass Value Tuesday
Choice up 1.15 208.35
Select up 2.74 196.67
C/S Spread 11.68
Carcass up 5.02 75.09
Bellies up 2.11 112.75
- Corn dn 3/4 up 1
- Soybeans dn 1 3/4 up 1 1/2
- Chicago Wht up 3 – 4
- Kansas City Wht up 3/4 – 2 3/4
- Live Cattle dn 0.07 up 1.17
- Feeder Cattle up 0.62 – 1.22
- Lean Hogs dn 0.05 – 2.00
- Class III Milk dn 0.04 up 0.21
Pre-Opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Strong winds ripped across Iowa on Monday. This could mute some of the data coming out this week.
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Equities moving higher could help start cattle higher.
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. The trade is setting up a typical pre-report day, but could fundamentals overcome the traditional narrative..
John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Grain exports look to be strong this week. No John Payne for 8/11.
Jack Fenske, York Commodities, looks at the closing market numbers. Fenske is not expecting to see a friendly report on Wednesday.