CORN
Corn futures were firm overnight ahead of this morning’s USDA Weekly Export Sales and following friendly Weekly Ethanol Stats yesterday. July and Dec corn were up 3-1/2 cents to 7.97-3/4 and 7.39-3/4, respectively. Trade estimates for Export Sales are 500,000 to 1.20 mil tons for old crop, 700,000 to 1.20 mil for new crop. The trend remains well supported given the overall chart images, but we cannot ignore the recent choppiness as a signal that a strong push by U.S. farmers to get their crop in the ground could form some near-term topping action in the corn market. However, the U.S. Midwest 7-day forecast is wet. The following week could be warmer and drier. Central Brazil, Argentina and EU are dry. Higher crude oil futures offers support. The uptrend in the green back favors the corn bears. The next area of resistance for the July contract is around 8.01-1/4 with support down around 7.81-1/4.
SOYBEANS
The soybean complex was mostly higher overnight. July beans rose 15 cents to 16.55-1/2. Nov was up a dime to 14.96-3/4 as both contracts make it back over their respective 50-day moving averages. Trade estimates for Export Sales are 200,000 to 575,000 for old crop beans and 400,000 to 1.05 mil tons for new crop. Soybean meal sales are seen at 100,000 to 300,000 tons for old, zero to 35,000 for new. Soy oil sales are estimated at zero to 25,000 for old, zero to 5,000 for new. Jul meal was up 3.50 per ton overnight to 421.70. July soy oil was unchanged at 82.31. China is back from holiday. Dalian soybean, soymeal, palm oil and soy oil are lower. China’s purchasing managers’ index (PMI) is down to 36 vs 42 previous, raising concern about their economic growth. Next week’s USDA report is Thursday, May 12.
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WHEAT
Wheat futures rallied overnight on follow-through from Wednesday’s push higher on talk of India’s short crop and export ban. There is also concern about dryness in Pakistan and Bangladesh that may turn them into wheat importers. Dry EU weather and higher Matif futures are also noted. July Chicago and KC contracts surged another 28 cents to 11.04-1/2 and 11.51-1/4, respectively while moving back into the upper end of their recent trading ranges. July MPLS looks to challenge contract highs while advancing 21 cents overnight to 11.98-1/4. The U.S. north plains and east Canadian prairie forecast is wet. Trade estimates for Export Sales are zero to 200,000 tons for old crop, 100,000 to 250,000 tons for new crop.
CATTLE
Cattle calls are mixed for Thursday. Cattle markets have had a good move this week, but prices overall may hitting the top of the range. Traders will be watching grain markets and money flow trying to push cattle prices higher. June live cattle futures consolidated under the 50-day and key 200-day moving averages, still holding on to most of the gains for the week. There is still a large price gap overtop the charts after the last Cattle on Feed report, but that market may need more positive news to push into the window. Light cash trade began building on Wednesday with $140 cash trade in the south, steady with last week, and North ranging around $146. Northern dressed trade was at $232, again steady with last week. The lack of movement has placed pressure on the front of the cattle market. The bigger concern in the marketplace is demand. Export demand has stayed overly strong, domestic demand and the impact of inflation on beef consumption acts as a wet blanket over the market. Beef retail values are still historically strong, and at a the close, carcass values slightly higher (Choice: +.19 to 259.74, Select: +.34 to 247.68) on movement of 131 loads. Choice/Select spread is fairly narrow at 12.06 and could be reflecting a more current cattle supply. The feeder market was also mixed on Wednesday. May and June feeders are challenging moving average resistance, and if grain markets were to gain strength, feeder prices could be limited again.
HOGS
The hog market is called steady to higher after a wave of short covering on Wednesday to close with triple-digit gains. Despite strong gains, nearby and summer hogs traded within Tuesday’s trading range, keeping the move as a consolidation trade only. Prices did hold support at the 200-day moving average on Tuesday, which was likely the reason to trigger the short covering move. The technical picture on deferred contracts looks more friendly as the nearby months are still dealing with demand issues and a choppy cash market. Deferred contracts a posted more bullish action on the chart as prices were viewed as value given the forecasted tighter hog supply picture into the second half of the year. The price action overall may be the making of a seasonal low after this push lower. Cash markets still look to be an issue, limiting the front end of the market. The Lean hog cash index lost .44 to 101.15, and are back to trading at a discount to the May and June contracts, limiting the upside. Tuesday saw a firmer close, and that trend looked firmer on Wednesday. Morning weighted average prices were at 104.24, with a 5-day average at 101.24. Hog carcass weights have been 1.3% higher than last year, and slaughter has been strong, adding more pork pounds into the cooler. Seasonally, hog weights typically start to trend lower into summer, helping build some support. Carcass values in general have been choppy, trending slightly lower on the week.
Author
Matthew Strelow