***** Corn fractionally weaker at the break; soybeans off 4 1/2 cents; Chicago wheat up 2 to 2 3/4. *****
# Grains trade quietly lower on light volume ahead of the 11:00 am report release. A look at the estimates compiled by Reuters:
U.S. Production and Yield
*mln tons and bushels/acre
Average trade estimate
Highest trade estimate
Lowest trade estimate
# August features the first pair of survey-based estimates for corn and soybean yields. USDA conducts an Agricultural Yield Survey whereby they sample grower input on crop potential. The government analysts also complete Objective Yield surveys that rely on scouts making counts and measurements in the field.
# U.S. yield estimates will earn first glance today before traders turn next to the world wheat production forecasts. Drought should have reduced France’s wheat crop by some 5 percent this year, Germany’s by up to 20 percent. The wheat harvest in Australia is estimated about 5 percent smaller on the year. Russia’s crop may have fallen a little more than 20 percent this season.
# The report will help set the tone for trading into harvest, but weather will continue to have a say for price direction. Conditions this week have turned out more favorable than forecast last week. Many across the Corn Belt are still long removed from their last rain, but temperatures have been running lower than earlier feared. The two-week outlook features better moisture chances for the bulk of the Midwest but high temperatures and a drier trend threaten the northwestern stretches of the Corn Belt. # Chart traders eye resistance levels at $3.88 1/2 and $4.00 for CZ18, support at $3.75 and $3.73 1/2. SX18 is working up against support at $9 while trading ahead of the month’s low at $8.83 1/2. Upside for the contract puts resistance points at $9.22 1/4 and $9.43 1/2 into target.
# The dollar index is up trading at a fresh one-year high this morning rising geopolitical tensions send investors to the dollar for safe haven. Fears about Brexit help pressure the heavily-weighted pound and euro currencies. Currencies outside of the dollar index basket are weakening as well, like the Russian ruble in response to U.S. sanctions and the Turkish lira as a result of the dust up over Turkey’s detention of a U.S. pastor.
***** Live cattle drop $1.55 to $1.95 on Thursday; feeders off $0.72 to $1.07; hogs higher by the $3 limit. *****
# Hog futures moved limit up on Thursday, a day after gapping lower in approach of two-year contract lows. The market will find fundamental guidance from today’s supply and demand report. USDA currently projects pork production rising by 11 percent in the third quarter and another 11 percent in the fourth.
# Some slippage for boxed beef prices helped pressure cattle futures on Thursday as traders took on a negative view for cash market potential. Beef demand is still mostly a positive and supports prices that are about one or two points ahead of last year.
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