CORN
Corn futures traded 10 cents higher overnight while staying inside Monday’s ranges. July corn, at 6.87 posted an overnight high of 6.90-1/2 and low of 680-1/4. Dec reached 6.14-1/4 on the high end and an overnight low at 6.05. Dec was able to close higher yesterday when prices were unable to hold overnight gains into the close when forecasts changed to increased chance of rains, thus decreasing the spread between old and new crop. The GFS model is calling for needed rains in central Iowa over the next ten days while the European model, is calling for very little rain over much of Iowa over the next 10 days. Given the heat and wind over the last week, many in Iowa say the crop is continuing to hold up fairly well but precipitation will be needed soon. U.S. corn conditions dropped 4% this week to come in at 72% good-to-excellent, which was below the pre-report trade estimate. Traders are honing in on Thursday’s monthly USDA report where some believe 2020/21 corn carryout could shrink closer to 1.050 bil bu versus the last estimate of 1.257 bil bu, and 2021/22 carryout near 1.150 bil bu vs 1.507.
SOYBEANS
The soybean complex is up this morning. July beans had a 20 cent range between 15.81-1/2 and 15.61-1/2 and are up 13-1/2 cents to 15.73-3/4 this morning. Nov beans are up 10 to 14.50 while consolidating yesterday’s new highs. Momentum studies are positive which could accelerate a move higher if buying interest continues to come in when prices soften. Chinese September bean futures were down 61 yuan ; Soymeal up 15; Soyoil down 164; Palm oil down 198; Corn down 26. Malaysian palm oil prices overnight were down 85 ringgit (-2.06%) at 4044 headed for its biggest drop in more than two weeks on concerns about dwindling exports and a rise in output in second-biggest grower Malaysia. Most trade participants are looking for USDA to keep U.S. 2020/21 soybean carryout near 120 mil bu and 2021/22 at 140 in Thursday’s report. U.S. soybean crop ratings came in at 67% good-to-excellent, below the trade estimate of 70%. The ratings were pulled down heavily by North Dakota’s soybean crop, which was rated just 25% good-to-excellent. Soybeans were rated 72% good to excellent in this same week last year.
WHEAT
Wheat futures were firm overnight with Nearby July MPLS up 10 cents to 7.95 after posting an overnight high at 6.02 following a key reversal lower in yesterday’s action. July CBOT and KC wheat is up 7-1/2 to 6.87-1/2 and 6.37-1/2, respectively. Prices have turned choppy after falling hard yesterday from overnight strength. The European weather model for the next 30 to 60 days is showing above average temps and below average rainfall, which will keep spring wheat futures rather turbulent. Rain storms popped up across North Dakota the past 12 hours giving some much needed relief to a few areas. Weather over the next two weeks will be crucial to whether or not the crop survives. Record heat over the past weekend helped drop the good-to-excellent rating for the spring wheat crop to 38% versus 43% a week ago.
CATTLE
Cattle futures are called mixed to lower following a choppy to lower start to the week with selling pressure in the front months. Live cattle futures look soft, and are technically challenged. Prices are trending sideways to lower. The cattle market remains bear-spread as front end weakness is concerning as prices seem poised to recheck the recent lows. Seasonally cattle futures push lower in this time window until the June contract’s expiration on the 30th. Cash trade was undeveloped to start the week, as bids and offers were undefined. Trade will likely be steady to slightly higher this week. Retail values may be a concern in this window after the Memorial Day Holiday. Boxed beef prices were mixed at midday, but softened into the close. Choice carcasses slipped .38 to 338.60, and Select was down 2.56 to 309.17. Load count was light at 98 loads. Feeder cattle continue to take cures from the grain markets.
HOGS
Hog calls are steady to higher. Futures experienced buying strength to start the week, finishing with another round of contract highs or high closes. Carcass values were strong at midday, gaining 3.23, and held some of those gains into the close. Pork carcasses finished 1.44 higher to 134.73, with a moderate load count of 333 loads. The strong close will support futures today. Cash trended steady to higher and the lean hog index surged .70 to 114.75 to start the week. The June contract is trading at a $5.15 premium to the index, which could limit upside with June expiration in the 14th. The technical picture stays strong in futures, with the strong close to start the week, and the supportive fundamentals, hog futures are still looking for a top.
Author
Matthew Strelow