TOP STORIES:
Wheat Drops as Hopes for New China Purchases Disappoint
Wheat for September delivery fell 2.8% to $5.35 1/4 a bushel on the Chicago Board of Trade Thursday, as managed money funds pulled out of wheat after the USDA didn't confirm any new wheat export purchases by China.
Speculation that China would be buying more U.S. wheat hasn't come true, which is leading grains traders to do some selling of wheat futures on the CBOT Thursday. This has led managed money funds to retreat from their buying spree of yesterday, said AgResource. "The wheat market sags on diminished fund buying," said the firm. An estimated 6,600 contracts of wheat were sold on the CBOT today, according to AgResource.
Chinese Economic Recovery Buoys Soybeans -- Market Talk
13:13 ET - In addition to confirmation from the USDA that Chinese purchasing of US grain exports is continuing despite heightened diplomatic tensions between the two nations, stronger economic data out of China overnight has CBOT soybean futures higher today. "Chinese GDP for the 2nd quarter came in moderately above expectations at 3.2%, Chinese industrial production also beat expectations while Chinese retail sales for June disappointed with a decline of 1.8%," RJO Futures says. China's economic health post-Covid-19 is a key focus for US grains traders, relying on the Chinese appetite for agricultural exports to support demand for grains amid a flagging domestic marketplace. CBOT soybeans rise 0.9%. (kirk.maltais@wsj.com; @kirkmaltais)
STORIES OF INTEREST:
Brazil's Deforestation Hinges Heavily On Commodity Costs -- Market Talk
15:41 ET - Deforestation in Brazil's Amazon is headed to a new record this year, despite deployment of the country's Army to curb illegal logging. Consumers of Brazilian food commodities such as soybeans and beef have threatened to favor other suppliers if President Bolsonaro fails to curb forest loss. But Dan Basse, from AgResource, says it all boils down to price. "The EU is the only group of nations that will pay up to protect the environment," he tells WSJ. All other buyers, he says, "buy the cheapest offer." An area twice the size of Delaware is expected to be deforested this year in the world's largest rainforest. (paulo.trevisani@wsj.com; @ptrevisani)
Corn Belt Expected to Stay Wet -- Market Talk
13:30 ET - Rainfall in the Corn Belt is expected to water nascent Midwestern crops over the course of the next seven days, Arlan Suderman of StoneX says. "Rains of [one inch] or more are expected across most areas of the Midwest over the next seven days, although some areas will miss out," he says. This rainfall should help yields in the affected areas stay strong, Suderman says, although some areas are going to miss this rainfall, which could prove to have a big effect on those crops. Corn and soybean futures on the CBOT rise by 1.2% and 0.9%, respectively. Wheat futures fall 2.8%. (kirk.maltais@wsj.com; @kirkmaltais)
THE MARKETS:
Hog Futures Finish Up -- Market Talk
15:25 ET - Lean hog futures on the CME finished up 3.5 cents per pound, or 7%, to 53.65 cents per pound. The uptick in futures comes as market participants theorize that prices can only travel higher from their current levels. "There is some thinking that the pork cutout may be bottoming out and that the packers are going to start having to compete for hogs," says independent trader Dan Norcini. "Export markets may be perking up as well... hams in particular seem to have generated enough buying down at these levels to clean them up." Meanwhile, live cattle futures finished 1.9% higher at $1.03275 per pound - the highest the most-active contract has closed at since early March. (kirk.maltais@wsj.com; @kirkmaltais)
