CORN
Corn futures were down overnight as welcomed rainfall makes its way into western Iowa. July was down 6 cents to 6.58-1/4 as the contract continues to gain on September futures ahead of the delivery period amid tight supplies. In a hedge against inflation, index funds are record long grain and oilseed futures, but are liquidating long corn positions and even selling corn in anticipation of a bearish USDA June 30 corn acreage estimate. USDA may be 50 to 75 mil bu too low in their ethanol production guess and 100-150 mil bu too low in their export guess. Commercials are also near record short grain and oilseed futures. 2020/21 corn ending stocks could eventually drop below 1.0 bil bu depending on Chinese demand. Dec corn fell to a new low for the month overnight on losses of 12 cents to 5.23-3/4 though the spread has narrowed between old crop on weather changes. The new crop contract is headed for 100-day moving average support drawn at 5.17-1/2. Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 500,000 tons for 2021-22 marketing year crop versus 276,000 last week.
SOYBEANS
Soybean futures were down more than 20 cents at times overnight. July and Nov beans are 17 cents lower this morning to 13.68 and 12.83-1/4, respectively while staying inside last week’s lower trading ranges. Managed funds continue to liquidate soybean and soymeal longs on U.S. central Midwest rains. The front month soybean meal contract has not traded this low since last October, now erasing most of its rally that started in August of last year. Talk of warmer and drier U.S. NW Midwest July weather and that U.S. 2020/21 soybean carryout could be lower than USDA’s monthly June guess and below 100 mil bu is circulating throughout the market, but money flow is focused on U.S. central Midwest rains and slow soymeal demand. Pre-report estimates for June 1 stocks are near 763 mil bu, nearly half of last year’s 1.361 bil bu. This morning’s Weekly US export sales are estimated 200,000 to 800,000 tons versus 600,000 tons last week. So far this week, USDA announced quantities of U.S. new crop soybeans sold to China.
WHEAT
Winter wheat futures followed row crops lower overnight. Sept CBOT wheat is down 9-1/2 cents to 6.54-1/4. The KC contract is down 5 to 6.15-3/4. Sept MPLS wheat is off 2 cents to 8.00-1/4 after choppy trade overnight, supported by concerns about the HRS crop. U.S. north plains and Canada prairie weather forecasts are for warm and dry weather. Some are now looking at 1988 as similar year when only 75% of the ND spring crop was harvested. U.S. HRW harvest yields are above expectations. Carryout could increase to 170 mil bu vs 111 last year. Trade estimates for thie morning’s USDA Weekly Export Sales are 200,000 to 525,000 tons.
CATTLE
Cattle futures are called steady to lower following a weak close on Wednesday. The cattle market may stay very choppy and in consolidation mode until the Cattle on Feed report on Friday afternoon. Countryside talk of negotiated $125-126 cash cattle trade surfaced in some regions, but reported trade has been overall quiet and undeveloped. Choice carcass values have fallen off, and where down 3.70 to 312.05, and Select dropped 4.34 to 275.41 at the close, as product values seem to have found a top. The load count was moderate at 119 midday loads. The concerns regarding demand may limit the cash market, and any strength this week could be deemed as a seasonal top. Feeder cattle saw long liquidation and profit taking, pressured by the weakness in the live cattle market.
HOGS
Hog futures are called lower as selling pressure leans heavily on the front end of the hog market. Weekly export sales may give prices traction, followed by the Quarterly hogs and pigs report later this afternoon. With the limit lower close in the July contract, the hog market will have expanded limits of 4.50 again today. Charts continue to breakdown technically, as long liquidation fuels the market. August hogs are trading nearly $20 off the high from June 7. The cash hog market seems to have topped out, and the index is trading off its recent highs. The Cash index was .05 firmer on Wednesday to 120.73. Retail carcass values have trended softer, and faded off midday strength into the close. Pork carcasses slipped .01 to 107.82 on moderate demand of 366 loads. At the close, pork carcasses are trading nearly $17.00 off last week’s values. Expectations for the Hogs and Pigs report are: as of June 1 the All Hogs and Pigs number is expected to be down 2.5% to 75.430 million head which would be the lowest for the period in three years. Analysts are all expecting the breeding herd to decline 1.4% to 6.237 million head. Hogs kept for marketing is expected to decrease 2.6% to 69.191 million head.
Author
Matthew Strelow