MARKET SUMMARY 6-29-2021

A big concern in the live cattle market has been the drop in retail values. On June 2, choice carcasses peaked at $340.16, and this afternoon broke the $300.00 level, losing another $4.62 at midday to $292.81. The near $50 drop is falling into the seasonal window when the early pent-up demand for grilling wanes, and the market moves into a more summer-like trade. The cash market has seen a recent move higher, supported by the strong retail values and the packers’ need to bid up for quality. The drop in retail prices makes it difficult to possibly maintain the strength in the cash market. With cattle number staying relatively heavy and demand concerns building, the cattle market may be poised to push to an early summer low. The key over the next couple weeks will be the direction of cash and the support it can provide in the live cattle futures market.

CORN HIGHLIGHTS: Corn futures closed 19 cents firmer in July at 6.94-1/2 and 1-1/4 higher in December, ending the session at 5.59-1/4. December experienced a trading range of 18 cents. Traders squaring positions prior to tomorrow’s Acreage and Stocks report may have been a primary feature in today’s trade. We sound a bit like a broken record, but the northwest regions of the Midwest remain generally dry, and the forecast continues to suggest above normal temperatures and below normal precipitation. Parts of the Midwest have had excellent rain events as of late, yet some received too much precipitation. While most rain was helpful, for many it is not enough. Bottom line is weather is still the dominant factor for the corn market. The need for excellent weather will grow in importance after tomorrow’s reports. Expectations are for acres to increase from the March 31 estimate of 91.1 million to 93.8 million. Quarterly stocks are expected to decline 837 million bushels from a year ago at 4.13 bb. Most likely the biggest number tomorrow to have impact will be the acreage estimate. Sharp gains in the July contract could suggest commercials are willing to take long positions into first notice day tomorrow to take delivery, a sign of strong demand. Crop ratings indicated 64% good to excellent down 1% from a week ago.

SOYBEAN HIGHLIGHTS:Soybean futures for July finished at 13.59-3/4 gaining 2-3/4 cents for the day and well off the high 13.72-1/2. First notice day for July futures is tomorrow. September soybeans closed at 13.17-1/2, up 1-3/4 cents. November finished unchanged at 13.12-1/2. Soymeal futures dropped 3.00 to 5.00, while oil finished with strong gains of more than 150 points. The weather forecast for the northwest portions of the Midwest continues to remain warm and dry. While not in the critical reproduction stage for soybeans, this is still a less than desirable forecast, suggesting growth could be inhibited. We maintain a bias that supplies are historically small for this time of year, and this will likely be exhibited tomorrow when projected quarterly stocks are released. The pre-report estimate is 773 million bushels which compares to last year’s 1.381 billion or 608 million bushels less than a year ago at this same time. Acreage is forecasted 89.1 million and expected increase of 1/5 million from the March estimate. Anything less than ideal weather provides support. Prices rallied sharply yesterday but traders appeared to be content with squaring positions today. By some accounts, new crop soybean prices may have little to no weather premium.

WHEAT HIGHLIGHTS: Jul Chi down 6 1/4 cents at 6.39 3/4 and Dec down 5 1/2 cents at 6.53 1/4. Jul KC wheat up 1 cent at 6.19 and Dec flat, closing at 6.36. Despite posting minor gains in the a.m. session, wheat trickled lower toward the close. Talk of higher US 2021 HRW & SRW crops and slow export demand offered resistance into July deliveries and USDA June Stocks and Acreage report. Tomorrow, it’s expected the USDA will estimate wheat acres near 46 million – slightly lower than the March estimate. Wheat stocks are expected to be near 860 million. Tomorrow’s report could likely be a short-term price director, as weather seems to be more in control of prices right now, than the USDA. There is concern for the SRW crop – if rains don’t ease soon, disease will become a concern moving forward. Due to extreme heat and drought, current crop rating is only 20% good/excellent for spring wheat. North Dakota was rating only 20% good/excellent with 42% of the crop headed. There are no current rains built into 6-10 day forecast for the northern Plains; many areas will be under triple-digit temperatures this week.

Author

Bryan Doherty