CORN
New crop corn futures continued to slip lower overnight on follow-through downward momentum before getting back to Tuesday’s settlement price levels. Dec fell to a five-week low of 5.08-1/2 while putting in an overnight session high at 5.16-3/4. One of the contract’s key support levels, the 50-day moving average at 5.26 was breached in Tuesday’s trade and now serves as an upside target should bullish traders reassert themselves in the coming days. Nearby July corn, supported by strong basis, is up a nickel this morning to 6.25-1/4 after matching Tuesday’s fresh multi-week low of 6.17-1/4. Weekly Ethanol Stats will be out later this morning, Exports tomorrow. Barring a hiccup in crop conditions or near-ideal weather, continued long-liquidation threatens to continue to guide prices lower. Widespread rain events loom on the horizon for much of the Midwest.
SOYBEANS
Soybean futures were softer overnight in keeping with the recent down-trend. July is down 1-1/2 cents to 15.10-1/4 and appears headed to a test of 50-day moving average support located down at 14.78-1/4. Nov beans are 3-1/2 cents lower this morning to 13.43-3/4 versus that contract’s 50-day MA at 13.11. Talk of China attempting to limit imports of commodities in an effort to slow inflation adds pressure to lofty price levels in the bean complex. Overnight, Chinese soybean futures (SEP 21) were down 119 yuan ; Soymeal down 23; Soyoil up 46; Palm oil up 26; Corn down 45; And, Malasyian palm up 134 ringgit. Argentine port workers said on Tuesday they would hold a 48-hour strike starting at midnight (0300 GMT Wednesday), after paralyzing agricultural exports from the country last week with an initial work stoppage over demands they be vaccinated against COVID-19. Cargo traffic at the ports hub of Rosario, from which about 80% of the country’s grains exports are shipped, was snarled by last week’s strike by tugboat captains and other maritime port workers. A group of 11 unions issued a statement late on Tuesday announcing the new work stoppage.
WHEAT
Wheat futures are mostly lower this morning following two-sided action overnight. July CBOT wheat is down 4-1/2 cents to 6.52, KC down 3 to 6.01-1/2; And, July MPLS down 2 to 6.80-3/4. Should row crop prices stabilize and bounce, wheat may get a boost from their technically oversold condition after 7 consecutive days of lower trade. The spring wheat crop is taking advantage of recent rainfall and should benefit from favorable conditions extending into June. Additional showers are expected through the next week. Winter wheat set for harvest next month may see quality issues out of Oklahoma and Texas because of too much moisture. Periods of showers in the Central and Southern Plains will work through the region over the next week, benefiting developing to reproductive winter wheat. However, temperatures are falling below normal, which is limiting growth. The dollar is firm this morning after slumping to the lowest level since February 25th to begin the week. We view the index needing to fall below the 2021 low to give much support to the market.
CATTLE
Cattle futures are looking at mixed opening calls for this morning as prices seek direction. The cash market started seeing some early development this week with some light and scattered trade occurring at $120, which was trending steady to $1 higher in some regions. More business will likely take place as the week moves on. We view cash as still disappointing, thus keeping the front month contracts in check. The lack of cash market strength given the strong carcass values and packer margins has been disappointing, but packing capacity is the issue, keeping supplies backed up, weighing on the cash trade. Retail carcass values were strong on the close, as Choice carcasses gained 2.09 to 329.92, and Select was .87 higher to 304.26. Load count was light at 93 loads. Feeder cattle markets posted strong gains, with the exception of the May futures. May feeders expire on 5/27, and are staying in close contact with the cash index. A strong drop in corn prices has helped push feeders higher.
HOGS
Hog calls are for steady to firmer trade. Buyers came back in the hog futures on Tuesday, as prices pushed to new contract highs on the June through October contracts. The theme is all about the strength in the retail market. Pork carcass cutout values closed at a new all-time high Monday afternoon, taking the previous high from last spring. The market dynamics are completely different this year as strong demand have fueled those strong pork values. That strength continued on Tuesday, as pork carcasses were 2.31 higher to 124.52 with moderate demand at 336.52 loads. The strong retail close will help support prices on the open. Cash has flattened recently, but some buying strength surfaced yesterday and the lean hog index gained .38 to 111.81. The index is trading at a 3.44 discount to June futures, which could limit it’s upside in the near-term. Technically, the hog market is strong, with front-month contracts breaking through to new highs on Tuesday, leaving the door open to further upside strength. The market is moving into an over-bought condition, but at this time the fundamentals are guiding this market higher in search of a top.
Author
Matthew Strelow