CORN
Corn futures were up overnight with July corn matching yesterday’s contract high at 8.18-1/2 on gains of 6-1/4 cents. U.S. ethanol margins turned positive when July corn hit 8.17 and the new contract highs do not seem to be rationing U.S. corn demand. Option open interest is increasing. The highest July open interest is the 9.00 strike. Dec corn was up 3 cents overnight to 7.53-1/2 in a bid to take out that contract’s high at 7.55 from April 19 as Ukraine sits aside the corn export market and Central Brazil faces its driest conditions in 17 years. Next Monday, the daily trade limit for corn futures will increase to 50 cents from their current 35 cent limit. Trade estimates for this morning’s USDA Weekly Export Sales numbers are 900,000 to 1.60 mil tons for old crop, 800,000 to 1.25 mil tons for new crop. The dollar made another new high overnight and crude traded two-sided. Stock index futures are up 300 points while clawing back from a drop to start the week.
SOYBEANS
The soybean complex traded narrowly mixed overnight. July beans are unchanged at 16.92-3/4. Nov is up 2-1/2 to 15.27-1/4. Jul meal is up 90 cents to 441.90. July soy oil is down 80 cents to 83.92. Trade estimates for this morning’s USDA Weekly Export Sales numbers are 250,000 to 800,000 tons old crop beans, 250,000 to 750,000 tons for new crop. Soymeal estimates are 100,000 to 250,000 tons for old crop, zero to 50,000 for new crop. Soy oil is zero to 24,000 for old, zero to 10,000 for new. Despite near record soybean and soy oil futures it does not seem that prices are slowing demand for U.S. soybeans. The largest July bean call option open interest is the $21.00 strike. Next Monday, the daily trade limit for bean futures will increase to $1.15 per bushel versus .90 currently. Overnight, Chinese September bean futures were up 26 yuan; Soymeal up 25; Soy oil up 170; Palm oil up 364; Corn up 21. Malaysian palm oil prices overnight were down 77 ringgit (-1.10%) at 6910.
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WHEAT
Wheat futures traded higher overnight led by a double digit advance in the Chicago market and new highs in spring wheat. July Chicago was up 13-1/4 cents to 11.04-1/2. July KC gained 8 cents to 11.62; And, July MPLS made another new contract high at 12.02 on gains of 7-1/4 cents. Trade estimates for this morning’s USDA Weekly Export Sales are zero to 175,000 tons for old crop, 150,000 to 400,000 tons for new crop. Next Monday, the daily trade limit for wheat futures will be .70 per bushel. Spot basis bids for hard red winter wheat held steady at elevators in the southern U.S. Plains on Wednesday, but protein premiums backed down from elevated levels, due in part to softer demand from flour millers, dealers said. Basis bids for wheat moved by rail to the U.S. Gulf fell by 20 cents a bushel, to 165 cents over K.C. May futures. The Texas Gulf cash market has been quiet, stifled by weak exporter demand for U.S. wheat supplies.
CATTLE
The cattle market is called mixed following a difficult session on Wednesday as a stronger tone in grains renewed selling pressure. Chart action was negative due to additional long liquidation and technical selling. June cattle retested the low established on Monday and have held that point on the close. Prices did close below the 200-day moving average, which could bring additional selling pressure into the end of the week. Trendline support under June cattle is at the $134 level. April Live cattle futures expire tomorrow and will try and stay tied to the cash market, which helped support the market on Tuesday. The cash trade was light on Wednesday with Southern deals at $140. Boxed beef prices were lower at closed (Choice 261.91 -2.26, Select 252.32 -3.91) adding to the selling pressure in the market on Wednesday. Movement was light at 160 loads. Feeders tumbled, falling apart technically as the weak live cattle tone and the higher grain prices triggered additional selling pressure. Most feeder cattle contracts broke to new or are challenging nearby contract lows. April feeder futures and options expire on Thursday and will stay tied to the index. The Feeder cash index gained .09 to 156.21 in line with April Feeders at 156.200. Cattle markets are the victim of a larger cattle number picture, and now charts have broken down technically. Additional selling pressure seems likely into the end of the week, as prices are searching for a near-term low.
HOGS
The hog market is called mixed. Chart action looks defensive, but the selling pressure did slow on Wednesday. The path of least resistance at this point still looks to be searching for a low, but cash market is trying to firm, and retail values have trended strong this week, which could help be an indicator of a near-term low. Bear spreading moved the front end of the market lower, removing more market premium over the cash market. Buying strength was in the back end of the market as Oct and later futures finished higher on the day. June hog futures saw additional technical selling as the market continues to move premium to the sidelines. The 100-day moving average is at $109.400 and could be a support point on the charts. Front end futures are moving into oversold territory and may be starting to look like a value. In the bigger technical picture, June hogs are completing a potential head and shoulders pattern, that could bring a test of trendline support under the market at $97.50 for a potential target. The Lean hog cash index has been trending higher, gaining .39 to 102.89 on Wednesday. The premium of the futures to cash has quickly evaporated with the selling pressure in the futures market. May is still holding a 1.2850 premium, and June is 7.460 over the index. The tighter gap between the two may limit some of the selling pressure. Cash markets have been softer, adding to the selling pressure, but did see a tick higher at midday on Wednesday. Closing afternoon direct trade held gains, finishing 1.70 higher to 104.73 and the five-day average settled to 103.69, as the direct market may be turning higher. Pork retail values were 3.68 higher at midday but slipped to close -.04 to 105.51. Product movement was moderate at 317 loads.
Author
Matt Strelow