CORN
Corn futures were down overnight on follow-through from yesterday’s topping action. May fell 19-1/4 cents to 6.76-1/4. July fell to 6.29-1/2. The next downside objective lies at 6.21-3/4. Technically, with July corn’s recent move more than a dollar above the contract’s 50-day moving average, prices have more room to correct to the downside. Dec corn was down as much as 25 cents to 5.37-1/4. Prices peaked in the overnight session yesterday before floundering most of the day session leaving the market vulnerable for more downside in the near term. Short-covering is evident as traders on the wrong side of the grain and oilseed markets are forced to liquidate due to margin calls. Talk of rains across the Midwest this week and next week could also help topsoil during planting season. Overnight tender activity had South Korean feed groups seeking 279,000 tons of optional-origin corn, and bought 50,000 tons of Ukrainian corn. Taiwan bought 65,000 tons of Argentine corn.
SOYBEANS
Soybeans were down 25-1/2 cents in the nearby May contract to an overnight session low of 15.24-1/4. July lost as much as 29 cents to 14.90-1/2, and Nov 27 cents to 13.15-1/2. Soyoil futures are also reversing lower after scoring new highs. Talk that market had more than reached technical objectives on the upside, leaving the market overbought, led to follow-through weakness overnight. Chinese Ag futures (September) settled down 52 yuan in soybeans, down 5 in Corn, down 51 in Soymeal, down 8 in Soyoil, and up 48 in Palm Oil. Malaysian palm oil prices were down 121 ringgit at 3,951 (basis July) at midsession on position-evening. In the news, U.S.-based meat processor Perdue is shipping one cargo of 31,450 tons of Brazilian soybeans into the United States, according to line-up data from shipping agency Cargonave, as stocks dwindle in the destination market. U.S. renewable fuel credits soared on Tuesday to the highest on record, as higher costs for soybean oil pushed up both renewable fuel and biomass-based credits.
WHEAT
Wheat futures were down more than 20 cents overnight across the board while tracking movement in row crops. May Chicago wheat, at 7.16 is experiencing a bearish development after rallying to the highest level (7.73) since July 2013 this week. July is off 21-1/4 cents to 7.11-1/2 to the contract’s first area of support. The next downside objective is 6.97-1/2. The KC (July) wheat contract is down 23-3/4 cents to 6.87-1/2. MPLS (July) lost as much as 23-1/2 cents to 7.23-3/4. The key reversals suggest increased near term selling. It’s noteworthy that Egypt cancelled their tender due to high prices. In the U.S., last evening’s GFS model run was much drier in many crop areas east of the Rocky Mountains May 7 – 12. The most notable decreases were in the Delta, southeastern states, central Texas, central Oklahoma, Kentucky, Nebraska, and South Dakota.
CATTLE
Cattle calls are for two-sided trade this morning. Despite a strong move higher in box beef values, a lack of response from the cash market pressured the live cattle market overall. Cash was very light, but some deals were seen in the south, ranging from $118-120, mostly steady with last week. . . still not enough to establish a trend for the week, but signaling caution. The Fed Cattle Exchange is set for its weekly auction later this morning. Choice carcasses were a strong, 5.79 higher to 290.99, and Select followed suit, up 5.18 to 279.53, on good movement of 105 loads. Strong retail carcasses should help support the cash market. The feeder market will likely be tied to the mid-week weakness in the corn market. April feeders expire today, will likely keep the market choppy.
HOGS
Hog calls are mixed to higher. The price action, despite being steady to lower yesterday was good, as prices pushed to the top of the range for the day at the close. This could bring some additional strength on the open today. Cash trade has stayed strong, as the Lean Hog Index gained another .66 to 107.17, holding its upward trend. June hogs are now trading at a discount to the index, and that should help support prices. Carcasses were 1.38 higher to 110.68, on good demand of 373 loads. The demand strength will be able to support this market as overall pork supplies are tight.
Author
Matthew Strelow