CORN
Corn futures were down a dime overnight with nearby July trading around 6.75 and the new crop December contract settling in around the 6.00 price level mid-week. The market is now struggling with the near term forecasts showing rains but longer forecasts still showing above-average temperatures and below-average precipitation. Weekly Ethanol Stats will be out mid-morning followed by Weekly Export Sales early tomorrow morning and then the 11:00 AM (CT) release of the June USDA Supply/Demand report. Most expect to see a downgrade to Brazil’s corn crop. Last month the USDA estimated total Brazilian production at 102 mmt. The range of estimates is from near 89 mmt to 102 mmt. Above to well-above normal temperatures are to continue through Saturday across the U.S. corn belt. The 6-10 day U.S. Midwest weather outlook holds scattered showers east Sunday through Tuesday, then mostly dry Wednesday and Thursday. Temperatures are forecast to be above normal Sunday, near to above normal Monday, above normal west and near to below normal east Tuesday through Thursday.
SOYBEANS
The soybean complex is lower this morning. July beans are down 13 cents to 15.67 and Nov is off 15 to 14.42 as the contracts retreat to the lower end of this week’s trading ranges. Chinese Sept beans were down 28 yuan ; Soymeal up 15; Soyoil down 92. Malaysian palm oil prices overnight were down 186 ringgit (-4.59%) at 3863 falling for a third session on prospects that stockpiles in the world’s second-biggest grower Malaysia may be bigger than expected amid higher production and lackluster demand. U.S. bean planting is 90% complete verses the 5- year average of 79% and weather will be a dominate market mover as we get through tomorrow’s USDA numbers. Elsewhere, Argentine grain and oilseed exports were bogged down on Tuesday by a seven-hour strike by customs officers pressing for access to COVID-19 vaccines, the latest in a series of work stoppages tied to the slowly unfolding inoculation program. The strike was not expected to have a major impact on shipments, but exports could slow if longer strikes are called. Soybean crushing in Argentina reached a six-year high in April when 4.2 million tons of the oilseed was processed, thanks to ample farmer sales due to high prices, the CIARA-CEC chamber of oilseed processors said in a report on Tuesday.
WHEAT
Winter wheat futures were down 7 to 8 cents overnight to 6.77 in July Chicago and 6.24-1/2 in July KC. July MPLS Spring wheat was down 20 cents to 7.51-1/4 as volatility remains high due to crop concerns and weather. Rains, some locally heavy, made their way through isolated parts of the northern Plains in the past 48 hours, but the latest USDA spring wheat crop rating at 38% good-to-excellent, is the lowest raring seen since 1988. U.S. winter wheat ratings did improve 2% from the previous week to 50% good-to-excellent. Private analysts are estimating an 80 mmt wheat crop from Russia, but long-term weather forecasts are showing hot and dry conditions. In tender activity, Algeria purchased around 400,000 to 500,000 tons of option-origin milling wheat in an international tender that closed Tuesday. Jordan is in the market with a tender to buy 120,000 tons of option-origin wheat; Japan seeks 181,355 tons of food-quality wheat from the U.S, Canada and Australia in a routine tender.
CATTLE
Cattle futures are called mixed after fighting off early selling pressure to finish with mild gains on Tuesday. Cash trade was starting to develop with light $120 trade, steady with last week while holding a premium to the futures, and likely supporting the June contracts. Carcass values softened off midday gains, as Choice carcass gained .01 to 338.61, and Select dropped 2.99 to 306.18 on the close. Demand was light at 108 loads. Estimated slaughter was back to 120,000 yesterday, up from 115,000 last week. Slaughter has recovered from the JBS plant issues last week, but the market is still heavy with slaughter ready animals. The charts still look concerning, and working in a sideways to lower manner. Live cattle typically put in a “bottom” during the June window, and may be poised for that type of performance.
HOGS
Hog calls are steady to higher. Hog futures finished mixed to mostly higher on Tuesday with the summer months highlighting the weakness in the market, but June, December and later contracts closing with new contract high. The lean hog index jumped 1.76 higher to 116.51, reflecting the cash market strength. The June contract expires on June 14th, and is trading at a 4.19 premium to the index, which could limit upside. However, the overall technical picture stays friendly, and the strong close in June hogs opens the door for additional buying strength today, as the friendly fundamentals keep the market looking for a top. The demand in carcass values are still extremely strong and gaining .21 at the close to 134.94 on moderate demand of 378 loads. The pork product index gained 1.66 to 131.66, reflecting the past 5 days of carcass strength.
Author
Matthew Strelow