MARKET SUMMARY 6-21-2021
While the boxed beef values have weakened in the cattle markets, the spread between choice-select cutouts has continued to widen. The strong value in the spread suggests that the market’s demand for choice quality beef remains extremely strong. This strength, and the market looking for quality beef, was a contributing factor to the strength in cash cattle prices last week. To start the week, the choice-select spread has stayed strong, moving to 41.03 at midday trade, very reflective of the demand for choice graded products is out-weighing the supply. Seasonally, the spread starts to decline in this window as the thrill of early-season grilling demand and foodservice begin to stabilize. With the overall demand picture staying strong, the pullback this year may be limited, but weakness in the spread could pressure the cash market and the cattle market overall in the near future.
CORN HIGHLIGHTS: Corn futures ended mixed with front month Jul gaining 4 cents to close the session at 6.59-1/4 and new crop Dec losing 9-1/4 to close the session at 5.57. Much welcomed rain in parts of the Midwest and additional rain for the end of the week are viewed as beneficial for crop production. Yet, most of the rainfall fell in the eastern two-thirds of the Corn Belt. Cooler temperatures this week are also conducive to production. The western regions of the Corn Belt remain without moisture or only minimal amounts. The 6-10 day forecast also has this region forecasted to experience above-normal temperatures and below-normal precipitation, both supportive for price. Export inspections at 58.3 mb were viewed as supportive putting the year-to-date total to 2.186 billion bushels or 76.7% of the yearly total expectation of 2.85 bb. The volatile ride continues with futures experiencing a wide trading range today that saw Jul trade in a 29 cents range and Dec just under 25 cents. We indicated last week the story of the haves and have nots. Historically the corn crop handles dry weather relatively well if rain eventually comes. The problem in the West is that it needs moisture to come soon. The other concern is low subsoil base. Therefore, not only are rains needed soon, but consistent rains will also need to occur. Because of strong demand, tight carryout, and part of the Midwest struggling more each day, we remain supportive. We fully expect more acres on June 30 when the Acreage report is released.
SOYBEAN HIGHLIGHTS: Soybean futures rebounded today with strong gains in soy oil and good export news. Jul futures gained 19 cents closing at 14.15 and Nov added 6 cents to end the session at 13.19-1/4. Soy oil gained near 200 points while meal finished with small losses. Export inspections at 6.4 mb were neutral to negative. Year-to-date inspections are now 2.94 bb, 91.8% of the latest export sales expectation of 2.280 bb. Expectations that crop ratings will decline, despite weekend rains, provided support, as did announced sales of near 20 million bushels (most for China and the remainder for unknown destinations also expected to be China). The good news is sales are beginning to occur after a price drop suggesting end users are taking advantage of better value, especially true in front of the growing season. It looks like the western regions of the Corn Belt will remain dry and this could be a problem for soybeans. The eastern 2/3 received much-needed moisture over the weekend and have more in the forecast. July and August are key weather months for soybean production.
WHEAT HIGHLIGHTS: Wheat prices traded mixed today, as prices consolidated off of last week’s volatility. Jul Chi down 1-1/2 cents at 6.61-1/2 and Dec down 3/4 cents at 6.70-1/2. Jul KC wheat was down 6-3/4 cents at 5.99-3/4 and Dec was down 6-1/4 cents at 6.20. In spring wheat, the Jul contract gained 2 cents to 7.64-1/4. The spring wheat market saw buying support for ongoing dry conditions in the northern Plains. Though some areas saw limited precipitation over the weekend, it was insignificant compared to the overall picture. Weekly crop rating in spring wheat will likely trend lower again this week. Ongoing winter wheat harvest keeps the pressure on the winter wheat market. The USDA will update harvest progress on this afternoon’s Crop Progress report as harvest pace moves north. Weekly export inspections were supportive at 20.2 mb, above market expectations. Total inspections are running at 46 mb early in the marketing year, down 16% from last year. Historically, wheat prices may be undervalued and trading under the price of corn, but at this time, the global supply and domestic supply of wheat are healthier, and that is reflective in prices. Wheat was in an overall consolidation pattern, holding above last week’s lows. The market may be looking for more direction, and that may come from crop ratings or the Acre report on the 30th of June.