CORN
Corn futures traded higher overnight, tacking on 5 to 6 cents and making a new contract high in the December contract at 5.10-1/4. Nearby May corn go to 5.85-1/2 and July 5.72, both coming in shy of their respective highs. Historically tight ending stocks, combined with less-than-ideal conditions in Brazil and parts of the U.S. keep prices underpinned at the mid-point of this month. The USDA estimates on Friday dropped 2020-21 U.S. corn stocks-to-use to 9.2%, both equal to and the lowest since 2013-14. That ratio, which gauges both supply and demand, was seen at 10.3% last month. Weekly Ethanol Stats will be out today, Exports tomorrow. Overnight newswires included the headline: “Corn-based ethanol output jumps 58% in Brazil, with more growth to come.” In overnight tender activity, South Korea bought 65,000 tons of Option-origin corn.
SOYBEANS
The soy complex was firm overnight. Nearby May beans were up as much as 8 cents to 13.99-1/2. July beans advanced 5-1/2 cents to 13.93. Nov gained 7 cents to 12.58-1/4… all mid-range of this week’s trading ranges, so far. The monthly NOPA report is scheduled for release at 11 a.m. CDT tomorrow. NOPA members were estimated to have crushed 179.179 mil bu of soybeans in March. If realized, it would be the sixth-largest monthly crush on record and up significantly from February, when NOPA members processed just 155.158 mil bu, a 17-month low. But it would be below the March 2020 crush of 181.374 mil, which is a record for the third month of the year. Estimates ranged from 165.000 to 189.645 mil bu.
Chinese Ag futures (September) settled up 8 yuan in soybeans, up 21 in Corn, down 20 in Soymeal, up 128 in Soyoil, and up 114 in Palm Oil. Malaysian palm oil prices were down 21 ringgit at 3,705 (basis June) at midsession weakened by rising output, container shortage hampering exports. In Brazil, some erratic shower and thunderstorm activity through Monday will still provide some relief from recent dryness. Mato Grosso and western Rio Grande do Sul will likely receive the greatest rain into early next week. Additional erratic showers and some thunderstorms are likely in the last eight days of April and last evening’s GFS model run showed much of Brazil’s production region dry in this timeframe. Conditions in Argentina will be mostly good.
WHEAT
Wheat futures traded 7 to 8 cents higher overnight as the market stays choppy and rangebound. July Chicago futures, at 6.37-3/4 stay above moving average resistance. July KC is at 5.92; And, MPLS at 6.63. A break to the downside in the dollar combined with strength in corn is helping give wheat its bid this week. An important rain event is still expected across much of the HRW wheat region tomorrow into Friday which will help further increase topsoil moisture with a possible exception in part of the TX Panhandle.
CATTLE
Cattle calls are mixed, facing pressure from the weak tone on Monday. June cattle are challenging trend-line support and the market awaits cash trade for direction. Producers are asking $125, but bids are undeveloped. With the weaker futures market, packer will likely soften bids from last week to start trade. The Fed Cattle Exchange will take place mid-morning. Most likely, the majority of cash trade will hold off until later in the week. Retail carcasses stayed mixed, as Choice carcasses were softer again at midday, finishing 1.30 lower to 270.11, but Select gained .38 to 266.54 on moderate demand of 125 loads. Strong carcass values should help cash market bids. Feeders saw strong selling pressure with triple digit losses sending May feeders back under $150. This is a concern and opens the door for additional long liquidation. A strong move higher in corn prices, plus the weakness in the cattle markets overall adds overhead resistance.
HOGS
Hogs are called steady to higher. Futures finished mixed on Tuesday, as prices fought off early session lows led by the strong reversal and technical selling on Monday. April hogs expire on Friday this week and are working to get in line with the cash index which gained .52 to 101.89, but is still trading at a 1.51 discount to the nearby contract. The index still reflects a strong cash market. Retail carcass values regained their strength at midday by 5.36 to 115.46, finishing 2.39 higher to 112.49 on 375 loads. The retail strength should help support the market on the open today. The technical picture looks weak for the short-term and the market is working out of an over-bought condition. There is still additional room for prices to push lower, and fill the price gap on the charts for March 26. This may be a target for traders to firm up the hog charts. Overall, the market is setting up a battle between fundamentals with strong retail value versus the liquidation due to the technical picture.
Author
Matthew Strelow