CORN

Corn futures appear to be starting an upside breakout this morning, with July up 0.0525 to 3.2925, September corn is up 0.045 to 3.33 and December corn is up 0.04 top 3.4225. Weather forecasts aren’t proving much support, as hot and wet conditions are beneficial for crop growth. China has sold nearly 8MMT of corn out of state reserves over the past two weeks. Crude oil prices tested and failed overhead resistance yesterday, so there isn’t much support coming from the energy sector today. Funds are likely covering shorts today. Corn markets have not been able to break lower despite immense selling pressure and bearish fundamentals, so managed money traders may want to take some risk off in case the market begins a breakout higher. The Brazilian real is still trading at 7-week highs and the US dollar is pushing to new lows for the move. July corn futures punched through the 50-day moving average resistance level, and a close above would be the first since January 28. The US sold 637,500 tonnes of corn for the week ending May 28, up 49% from last week but down 19% from the previous 4-week average. Funds were thought to have sold about 5,000 contracts of corn yesterday.

SOYBEANS

Soybean futures are showing impressive gains so far today, confirming strong technical developments made earlier this week. July soybeans are up 0.1375 to 8.715, August beans are up 0.13 to 8.72 and November beans are up 0.1225 to 8.785. Soybean basis in Brazil is surging as producers hold remaining inventory tightly. The Brazilian real to US dollar exchange rate is shifting very quickly to make US supplies more attractive to foreign buyers, including China. Strong technical closes are keeping the speculative traders in the mix. July soybean futures made their first close above the 50-day moving average resistance level yesterday since January 17 and have surged higher this morning. The US sold 495,200 tonnes of beans for the week ending May 28, down 23% from last week and down 36% from the previous 4-week average. Funds were thought to have bought about 5,000 contracts of soybeans yesterday.

WHEAT

Wheat markets are sharply higher this morning, with July CHI wheat up 0.1375 to 5.2575, July KC wheat is 0.16 higher to 4.74, and July MPLS wheat is up 0.0825 to 5.285. Hot and dry conditions in the Plains are not showing signs of wavering over the next two weeks, which will speed up harvest, but also stress crops. There are also growing concerns about hot weather in Russia. A sizable pullback in the US dollar should make US wheat supplies attractive on export markets. July CHI wheat briefly tested the 10-day moving average support level and is currently testing the upper Bollinger Band resistance level, trading at the highest levels since May 11. KC futures are trading at their highest levels since May 12 after early tests of support. MPLS futures are continuing their higher trend and are trading at their highest levels since April 20. The US sold 179,500 tonnes of wheat for the week ending May 28, down 14% from last week and from the previous 4-week average. Funds were thought to have bought about 2,000 contracts of CHI wheat yesterday.

CATTLE

Cattle markets are trading slightly higher this morning, still holding within recent ranges. June lives are up 0.40 to 95.85, August lives are up 0.60 to 97.95 and October lives are up 0.77 to 100.75. August feeders are up 0.80 to 135.02 and September feeders are up 0.87 to 136.65. Cash markets have made a significant pullback this week, starting out near 118.00, and trading as low as 110.50 late yesterday afternoon. Still, June lives are trading at a sharp discount to the cash market in delivery month. Beef prices are still falling hard which may further pressure cash cattle markets in the week ahead, especially as production increases accelerate. June live cattle are trading in a very tight range so far, trying to stabilize after sharp pressure in recent sessions, and the August contract is making a slight bounce towards the 10 and 20-day moving average levels. August feeders are still stuck between their 10 and 20-day moving average support levels, and the 100-day moving average resistance levels.

HOGS

Hog futures are mixed this morning, with June down 0.82 to 47.82, July is up 0.30 to 53.77, and August is up 0.77 to 55.67. The Cash Index is accelerating lower which will continue to hamper the June contract from stabilizing into expiration. Animals are still backing up in the country, so many are concerned that as slaughter continues to increase, and extremely heavy animals are brought to slaughter, pork stocks will quickly overwhelm demand. Cash hog and pork values are beginning to rally in China which could boost US exports if trade relations can recover. July hog futures are trading in a mostly quiet two-way range today, and are trying to stem recent losses. Stochastics are sharply oversold and leave prices vulnerable to a technical bounce.

Author

Bryan Doherty