CORN
Corn futures were up overnight following a cut in crop ratings. USDA pegged the U.S. corn crop at 67% Good-to-Excellent, down 3 points from last week. July corn rallied 10-3/4 cents to 7.55. Dec rose 12 cents to 6.65. Hot and dry weather stressed crops in the eastern Midwest and mid-South states. The share of corn in good-to-excellent condition dropped by 11 percentage points in Indiana and by 9 points in Ohio. Technically, last night’s strength may help a near-term bottom form in the market around 6.50 after prices fell below 100-day moving average support last week. Farther below, the contract’s 200-day moving average at 6.13 offers support. Hotter and drier weather in key Brazilian corn growing areas gave a boost to harvesting work, especially in Brazil’s top grain state Mato Grosso, according to a survey by AgRural released on Monday. The agribusiness consultancy said 20.3% of the area cultivated with second corn was harvested in the Center-South of the country through last Thursday. Second corn, which is planted after soybeans are reaped from fields in the same areas, represents about 75% of national production in a given year.
SOYBEANS
Soybean futures were up after USDA also lowered its U.S. soybean crop rating by 3% to 65% good to excellent. Nearby July beans are up 18-1/2 cents to 16.49 this morning. Nov is up 18 to 14.51-3/4. Analysts on average expected the USDA to hold its soybean rating steady at 68% good to excellent, with estimates ranging from 66% to 70%. Ratings fell by 9 points in Indiana, 24 points in Kentucky and 14 points in Tennessee. The agency said 98% of the soybean crop was planted as of Sunday, in line with expectations. Like corn, new crop bean futures (Nov) are bouncing off a key price area ($15.00) after slipping below 100-day moving average support. The contract’s 200-day MA is at 14.52. Chinese September bean futures were up 102 yuan; Soymeal up 61; Soy oil up 186; Palm oil up 264; Corn up 6; Malaysian palm oil prices overnight were up 96 ringgit (+1.95%) at 5018.
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WHEAT
Winter wheat futures rallied overnight, though still mired in a down trend toward 200-day MA support. Sept Chicago wheat gained 24 cents to 9.41-1/2. The actively traded KC contract gained 15-1/4 cents to 9.95. Sept MPLS Spring wheat inched upward with a 4 cent gain to 10.48-1/2. USDA rated 59% of the U.S. spring wheat crop as good to excellent, unchanged from a week ago and short of the average analyst estimate of 60%. The U.S. harvest of winter wheat was 41% complete, up from 25% by June 19 and 1 point above the average analyst view. Winter wheat condition ratings held steady at 30% good to excellent, below the average analyst estimate of 31%.
CATTLE
Cattle futures are called mixed to firmer. June live cattle are in their last week of trade with expiration on June 30 while trading at a discount to the cash market. The cash market will be a big key to cattle prices this week on the front end of the market. Expectations are for cash trade to stay steady with last week. The Cattle on Feed report continues to reflect a large supply of cattle available, as the total on feed in June was a record for the month. Supplies are expected to tighten in the loner-term, which allowed the deferred contract to trade over the front in contracts in a bear spread market on Monday. Beef carcass cutout values were firmer at midday and held good gains into the close with good buying support in the Choice grade. Choice values added 3.70 to 268.68 and Select was .22 higher to 245.24. The load count was light at 99 loads. Feeder cattle posted triple digit gains after the light placement numbers from Friday’s report, and the weak tone in the corn market. The tighter feeder number may start reflecting the tighter cattle supply picture and the impact of the large placement number from earlier in the year. Yesterday, the Feeder Cash Index values slipped .62 to 163.09.
HOGS
Hog market calls are steady to lower. We view the market will likely stay choppy ahead this week’s Quarterly Hogs and Pigs report. Prices look to trade between the 100-day and 200-day moving averages on both the July and August chart. This pattern has held since early May, as the market may be looking for a longer-term direction. Cash trade has stayed firm as packers bid up for hog supplies. Direct morning trade was soft on Monday, down 5.70 to 114.23, the 5-day average trade to a rolling average price of 117.39. The futures market has been running at a discount to the direct cash trade, supporting prices. The lean hog cash index traded .22 higher to 110.91, reflecting the overall support in the cash market. Demand has been more of a concern, and midday carcass values were softer, and faded into the close dropping 3.17 to 109.03 on moderate demand of 311 loads. Estimated slaughter last week was 2.304 million head, down 2.95 from last week, and 2.1% from last year. Despite tighter slaughter numbers, total pork production was 499.4 million ponds, slightly under last week, but higher than last year due to carcass weights remaining heavy, still trending 7 lbs. above last year.
Author
Matt Strelow