Provided by Stewart-Peterson Inc.
CORN
Corn futures were unchanged overnight. Another drop in the dollar coupled with strength in wheat overnight offers support. Weekly Ethanol Stats will be out later this morning, Exports tomorrow. After a severe setback from mid June to early July, corn futures have bounced back and forth without establishing either a notable retracement or a continuation of the downtrend. While there is enough in the forecast to make an argument for adding weather premium into the markets in the short-term, July has brought adequate rains to most areas of the Corn Belt, and the forecasts are expected to improve after some drying. There are concerns (given the heat wave in Europe) for their production, especially since they have imported a lot of corn from Ukraine in the past.
SOYBEANS
The soybean complex was mixed last night. Aug beans are down 7 cents this morning to 14.70-1/4. Nov is down 6-1/2 to 13.51-3/4. August meal is down 1.70 to 433.50 while sitting within the $30 to $40/ton range that has developed for front month futures over the last 12 weeks. A solid weekly close over $440.00 would open up potential for a leg higher, but every test of that area has been met with selling and the upcoming roll to September will bring the continuous chart nearly $30/ton lower. Weather talk has been buzzing about a ridge forming in early August which could bring stress to the soybean crop during their crucial month, but for now the crop is progressing well. The bean crop rating came in at 61% good-to-excellent on Monday afternoon, down 1 point from last week and up from 60% last year.
Like what you’re reading?
Sign up for our other free daily TFM Market Updates and stay in the know!
WHEAT
Wheat futures traded sharply higher overnight amid another leg lower in the U.S. dollar trade. Sept Chicago wheat rallied 25 cents to 8.37-1/4. The nearby KC contract rose 23 cents to 8.92-1/4. Sept MPLS Spring wheat added 21 cents to 9.50-3/4. After facing a sharp selloff in recent months, front month wheat futures are now trying to build a base. The September Chicago wheat contract had lost nearly $3.00 since the end of May, after settling at 8.12-1/4 yesterday. While winter wheat harvest has progressed to 70% complete, the spring wheat crop rating was pegged at 71% good-to-excellent, a massive improvement from the 11% rating a year ago at this time as rains have continued to hit North Dakota, Minnesota, and the Canadian prairies. The Russia/Ukraine news remains mixed, but the fact a lot of Russian wheat has hit the market in recent weeks has pressured the market, although their customer list has dwindled.
CATTLE
Cattle calls are for steady to higher supported by good money flow. However, live cattle prices are still struggling to break out through the top of the most recent trading range. The 100-day moving average stays as a barrier over top the futures market. Cash trade is still developing this week. Some light trade has been reported in parts of Texas with live deals marked at $136, roughly $0.50 lower than last week. Northern trade is still inactive on the week. Beef cutouts closed higher on the day with Choice at 272.57 gaining +2.02 and Select at 243.73 adding +107 with light to moderate box movement at 133 loads. Choice carcass values at $270+ are strong for this time of year, keeping buying support under the cattle market overall. Feeder cattle gapped higher on the open Tuesday, fueled by selling pressure in the grain markets. August feeders are trading a premium to the Feeder cash Index, which was .05 higher to 172.67, and could limit the front-end feeders. Fundamentals and money flow has been supportive of cattle markets. Feeders completed the technical breakout on Tuesday and are poised to challenge the most recent highs. Live cattle are still range bound and may need the cash market to provide the direction to go higher.
HOGS
Hogs are called mixed, underpinned by strength in the cash market. The strong cash market tone and premium of the index to the August contract helps support the front month, but hog futures are still range bound with the 100-day moving average limiting the upside of the deferred contracts. Cash markets were strong on Tuesday with morning direct trade gaining 4.90 to 117.49 and a 5-day rolling average of 116.63. The lean hog index is trending higher reflecting the cash market tone. The index gained .74 to 114.89 on Tuesday and is trading at a 2.065 premium to the futures market, supporting the August contract. The spread between august and October hogs is wide at 18.275, which should help pull the Oct futures higher, given the cash market. Pork retail values were firm, closing higher, gaining 3.16 to 125.12. Movement was moderate at 282 loads. The retail values have been trending higher, helping keep the packers active in the cash market. Daily slaughter was estimated at 460,000 head on Tuesday, up 9,000 from last week, but down 8,000 from last year. The forecast for hot weather across the corn belt will stay supportive the hog markets as weight gain may be limited, and cash market will need to bid more aggressive to ensure hog movement.
Author
Matthew Strelow