CORN
Corn futures were mixed overnight as prices consolidate within a wide trading range. July is down 3 cents this morning to 6.56-1/4, between the May 7 contract high put in at 7.35-1/4 and the low from May 26 at 6.02-3/4. The December contract’s high and recent low since during that timeframe is 6.38 and 5.00-1/4. This morning, Dec is down 3-1/2 cents to 5.53-1/2. Weekly crop ratings slipped to 65% Good-to-excellent with notable changes in IA, down 7%, MN down 8% and SD down 11%. The state of MI saw an uptick of 8 points. Monday’s mid-day European computer weather clearly outlines the dry biased area for this summer including the Canadian Prairies, the northern U.S. Plains and the upper U.S. Midwest. The northwestern Corn Belt is expected to join in on dryness late this summer, but the near-term outlook should be sufficiently mixed for NE, northwestern and central IA and WI. Other areas will have a sufficient mix of weather to support crop development. Despite the foreshadowing for later this summer, the model run may be a little too dry for near term interests. Cool air moving south from Canada, warm and moist air moving northward from the Gulf of Mexico and a couple of atmospheric boundaries are present to help set off significant rain events.
SOYBEANS
Soybean futures traded two-sided overnight and are in the red this morning. July beans are down 11 cents to 14.04 near the low end of last night’s 24-1/2 cent trading range between 14.27-1/4 and 14.03. Nov beans are off 17 cents to 13.02-1/4. Sept Chinese bean futures were up 74 yuan ; Soymeal up 2; Soyoil up 130; and palmoil up 80. Malaysian palm oil prices overnight were down 6 ringgit (-0.18%) at 3385 bouncing back on an overnight jump in soybean oil prices and signs of a recovery in shipments from second-biggest grower Malaysia. Weekly Crop ratings for beans slipped 2% to 60% Good-to-excellent versus 70% last year. 5% of the crop is blooming which is in line with the average. Despite overnight weakness, prices are getting support and near-term bottoming action from weather and export news. USDA said exporters sold 336,000 tons of U.S. soybeans for delivery to China during the 2021/2022 marketing year, following a Reuters report on Friday on the largest sale to the country in 4-1/2 months. Exporters also sold 120,000 tons of U.S. soybeans to unknown destinations for delivery during the 2021/2022 marketing year, the USDA said.
WHEAT
Winter wheat futures are firm this morning led by a spike in MPLS spring wheat contracts. Sept MPLS rose back above 8.00 to 8.02-1/4 on gains of 34-3/4 cents. Nearby July gapped higher to a break out above a 2-week consolidation phase. September Chicago and KC contracts are up 4 to 5 cents this morning to 6.69 and 6.14, respectively. Good-to-excellent ratings for spring wheat took a big hit in Monday afternoon’s weekly update. The readings fell 10 points to 27% from last week versus 75% last year. The trade was expecting around 35% G/E, so reaction was bullish overnight. 27% of the crop is headed versus 8% a week ago, 11% last year and 18% average. Weather in OK, KS and NE will be watched as rain interrupts harvest progress. 17% has been harvested versus 27% last year and 26% average. 49% of the winter wheat crop is rated Good-to-excellent, up a point from last week and down from 52% last year. The dollar is rebounding to remain somewhat strong, highlighting U.S. wheats’ overpriced value when compared to EU and Black Sea supplies.
CATTLE
Cattle futures are called steady to lower. Live cattle remained under pressure to start the week, as prices are looking for direction and consolidating ahead of Friday’s USDA Cattle on Feed Report. The market will be looking for direction from the cash market, which traded higher last week, but with weakening retail values, may have a hard time getting a higher bid this week. The cash market was undeveloped in typical fashion for a Monday and most activity will occur late in the week. Beef cut out values stayed under pressure to start the week as Choice carcasses closed 2.08 lower to 321.20, and Select was down 2.15 to 281.46. The load count was light at 90 loads. The Choice-Select cutout spread has widened to a value of $39.74. Demand for Choice products is fueling the spread, but seasonally, the spread narrows in this time window, and that could pressure the live cattle market and limit cash trade. The weakness in the live cattle market pressured feeder yesterday, but some selling pressure in the new crop corn market acted as support.
HOGS
Hog futures are called lower. The technical picture looks weak, and the selling is expected to continue amid long liquidation. Expanded limits to 4.500 are in effect today after the August contract settled 3.000 lower at 103.67. The 100-day moving average near 101.000 will be the next support level. The sell-off in the hog market is more technically driven, but fundamentals have been turning softer, giving the market additional reason to go down. Cash has weakened, and the Lean hog index lost 1.25 to 120.43. The index is holding a large premium to the July contract, which may limit its selling pressure. Midday values did jump higher, gaining 6.87 to 127.52, but failed to hold those gains into the close, finishing .11 higher to 120.76. Load count was moderate at 335 loads.
Author
Matthew Strelow