CORN
Corn futures were weaker overnight pressured by double-digit losses in wheat and a 55 basis point hike in the dollar. Futures are trading inside Friday’s ranges with nearby July corn down 2-1/4 cents to 7.75 and Dec down 3 to 7.27. Strength in the bean complex is helping limit losses. New highs in crude is also noted. Regularly scheduled weekly USDA reports will be backed-up one day this week after the markets were closed on Monday for Memorial Day. China is expected to ease Covid lockdown restrictions tomorrow, on June 1st, which could improve demand. They are said to be asking offers for U.S./Brazilian corn for September/October. Weekly Export Inspections will be out this morning. Some analysts are forecasting US 2021/22 corn carryout at 1.350 bil bu vs USDA 1.440 due to higher exports. US domestic corn and soybean basis levels are higher on increase demand.
SOYBEANS
Soybeans traded higher overnight. July futures rose 17 cents to post a new high at 16.79-1/2 supported by higher U.S. cash levels and talk of higher demand starting Aug 1. Nov peaked at a new contract high of 15.60-1/2 on gains of 16-3/4 cents. July meal reached a 1-month high at 436.50, up 4.20/ton; and, July soy oil was up .65 to 80.22. China is reopening after weeks of shutdowns due to their stricter Covid policy. The hope is that that Chinese crushers will unleash additional demand for U.S. soy. US 2021/22 soybean carryout could shrink to 200 mil bu vs USDA 235 due to higher exports. The trade also estimates US 2022/23 soybean carryout near 200 vs USDA 310 depending on final U.S. crop production. Overnight, Chinese Ag futures had Sept beans down 53 yuan; Soymeal up 17; Soy oil up 26; Palm oil down 112; Corn up 2; Malaysian palm oil prices overnight were up 69 ringgit (+1.11%) at 6301.
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WHEAT
Wheat futures were down overnight as prices explore where a bottom is in the market ahead of U.S. harvest and with World buyers net short. Talk of EU trying to get Russia to open a corridor for Ukraine exports is again offering resistance to wheat futures. This despite talk of dry conditions in EU, Ukraine, Brazil, Argentina and north China Plains. Russia still wants sanctions to be lifted, but continues to escalate attacks on east Ukraine. EU is trying to resurrect a plan to allow for Ukraine food exports. EU wheat is lower. July Chicago wheat lost 25 cents to 11.33. July KC fell 26-1/4 cents to 12.09. July MPLS wheat is down 18-1/2 cents to 12.86-1/4 this morning. Weather-wise, it is still too wet in east Canada prairies and ND. Weekly Progress numbers will be out after today’s close.
CATTLE
Cattle futures are called mixed. The cattle market is a mix of both supportive and negative factors. With the holiday past, the influence of cash trade, grain markets, and other outside markets will be key for cattle price direction. On Friday, the live market traded the opposite of Thursday with light weakness in the front month futures. Feeders were lower pressured by a firmer corn market tone. June cattle stay tied to the 10- and 20-day moving averages, but softer price action on Friday saw prices close below the 10-day, that could keep the market susceptible for more downside this week. June futures posted a bearish reversal on Wednesday, but prices consolidated at the bottom of that range with $132 as support. There was moderate to active fed cattle cash trade in the North in a full range of $137 to $144, with most sales at $141 live and $224 dressed. That is mostly $2 lower compared to the previous week. Light to moderate volumes traded in the South at mostly $136 to $137 live – mostly $1 to $2 softer than the previous week. The Choice cutout increased $2.27, while Select increased $1.63 as warm weather across most of the country really increases grilling demands. Feeders saw lower trade, influenced by the premium of the August contract to the cash index and strong prices in the corn market. The weaker corn market tone last night could support feeders on the open this morning. Aug is the new lead month and the premium to the cash index is concerning. The Feeder Cash Index was 0.45 higher to 153.80, but trading at nearly a $12.50 discount to the August futures.
HOGS
Hog futures are called mixed for this morning. The rally is taking a pause from trying to push to another level, but the 100-day moving average is a strong barrier. Market fundamentals are staying favorable and may be enough to move prices higher for the next leg. June hog futures traded at 111.430 on Friday. This was the fourth test of the 100-day MA in the past five sessions. If prices could work through this point, the 50% retracements of the recent sell-off from the April highs is at the $112.000 level. The midday cash market saw a softer tone on Friday. Midday direct trade was 2.80 lower with the weighted average at 108.54 and the 5-day average moved faded to 111.08. The CME Lean Hog Index traded 4.03 higher for the week. The premium of the June contract is concerning, and the new term upside may be limited by the 6.00 gap between the two. Retail values trended higher on Friday midday trade with carcass values .39 higher. Prices softened into the close losing 1.97 to 106.16. Movement was light at 283 loads. Pork carcass values were choppy trading slightly lower during the week. The CME Pork Cutout Index added 0.83 to 107.55 reflecting the recent strength.
Author
Matt Strelow