Doane Advisory Services  |   August 22, 2011

Corn futures are called 8 to 9 cents higher. Overnight trade at 6:45 am CT is 8 to 8 3/4 cents higher. Outside market support and continued talk of lower corn yields this week will be supportive. Weekend rainfall missed some the driest areas of the Corn that runs from southern Minnesota through Iowa to central Illinois. Crop stress in those areas is likely to reduce yields. A rebound in Dow Jones futures in overnight trade and weakness in the dollar could help support commodity markets this morning as well.

Soybean futures are called 12 to 13 cents higher. Overnight trade at 6:45 am CT is 12 1/4 to 12 3/4 cents higher. The soybean market remains in its trading range that is roughly $13-$14. Futures have rallied to the high end of that range on ideas of reduced soybean yields in some areas of the Midwest. There was some weekend precipitation in the Midwest, but dry areas of southern Minnesota, Iowa, central Illinois and southern Indiana remain dry. Crop stress is likely to limit yield potential. Gains may be limited by ideas of sluggish export demand in the weekly export inspections report out this morning.

Wheat futures are called 10 to 15 cents higher. Overnight trade at 6:45 am CT was 10 3/4 to 11 cents higher at the CBOT, 8 to 8 3/4 cents higher at the KCBT and 10 to 13 cents higher at the MGE. The MGE is leading the gains in the wheat markets again overnight on disappointing spring wheat yields. The winter wheat markets are being pushed higher as well on weakness in the dollar overnight and spillover support from spring wheat and corn.

Cattle futures are called lower on the open. The Cattle on Feed report released after the close on Friday was bearish for the market. July placements were larger than expected at up 22% from year-ago. The number of cattle on feed at up 8% from year-ago and the largest number in five years. The report will likely put pressure on cattle prices especially December and February futures. The big increase in placements this summer will add to beef supplies particularly late this year and early 2012.

Lean hog futures are called steady to mixed. Cash trade stabilized last Friday and pork cutouts were 73 cents higher. However, the outlook is for cash markets to decline as slaughter weights are expected to increase at the same time market ready hog numbers increase. Futures rebounded on Friday and losses should be limited even if cash turns lower because futures have already built in a large drop in the cash market.