CORN
Corn futures were down overnight. July corn fell a dime to 7.22-1/4 and Dec was down 15-1/2 cents to 6.21. Prices are showing signs of consolidating near last week’s new highs ahead of Wednesday’s monthly USDA Supply/Demand reports. The new crop contract added more than 70 cents last week to forge new multi-year highs leaving the market extremely overbought and due for at least a pause, if not a technical correction lower. July corn added nearly 60 cents last week, ending on a strong note from news that China bought 1.36 mil tons of U.S. corn. Weekly Export Inspections will be out today, followed by Weekly Crop Progress after this afternoon. Speculators’ bullishness toward Chicago-traded grains and oilseeds has hovered near record levels since late last year as global demand accelerates and supplies tighten, though various market participants have recently been in the driver’s seat when it comes to the persistent rally, especially in corn. Managed Money is net long an estimated 402,000 corn heading into this week’s trade. In outside markets, the dollar is seeing follow-through to the downside after Friday’s steep slide to fresh 2-1/2 month low.
SOYBEANS
The bean complex was mostly lower overnight, posting modest losses (relative to this year’s weekly ranges) of as much as 14-1/2 cents (July) to 15.75-1/4 and 17 cents 14.16-1/2 in the Nov contract. Both contracts are respecting Friday’s trading ranges and up-trend after posting new contract highs on Friday. Chinese Ag futures for (September) settled up 62 yuan in soybeans (at U.S. $26.00), up 32 in Corn (at $11.20), down 35 in Soymeal (at $520), down 14 in Soyoil (at 63.05 cents), and up 32 in Palm Oil. Malaysian palm oil prices were down 78 at 4,349 (basis July) at midsession, still correcting gains after prices had their best week in two decades. The U.S. will remain relatively good for spring planting, emergence and establishment of crops in the Midwest, central and northern Plains, Tennessee River Basin and southeastern states. There is still concern over crop and field conditions in parts of the Delta because of wet conditions and in the heart of the Midwest because of wetter biased weather over the next two weeks.
WHEAT
Wheat futures traded lower overnight. Winter wheat contracts were down a dime to 7.51-3/4 in July Chicago, and 7.25-3/4 in July KC. July MPLS was off 13-1/2 cents to 7.84. Taking a cue from row crops, the wheats are backing off after having become technically overbought after such a steep rise. Rain is expected in the northern Plains and Canada’s Prairies and should bring some much needed relief to dryness that should translate into better establishment conditions for summer crops as time moves along. Improved winter and early spring crop conditions are also expected in the northern Plains and Canada’s Prairies. For Wednesday, USDA May S&D numbers should show U.S. 2020/21 wheat carryout to be near 850 mil bu vs USDA’s last estimate of 852. Trade estimates for the U.S. 2021 wheat crop is near 1.877 bil bu vs 1.826 last year.
CATTLE
Cattle futures are called mixed after a choppy close to Friday’s session. Cash trade in the countryside was quiet on Friday. The trend was mostly steady to slightly higher. The beef pipeline for spring holidays is filling, but buying interest remains strong enough to push the cutout higher last week. Choice boxes advanced $12.61 and Selects increased $9.57. The strong retail prices should help support the cash market this week. Total estimated slaughter last week was 638,000 head with Saturday’s kill included, down 11,000 from last week. Carcass weights were down 2 pounds last week, and total beef production was 527 million pounds versus 550 million pounds the week prior. The corn market will stay a key component of feeder prices, and more strength in the gains keeps the sellers active.
HOGS
Hog calls are for steady to higher. Hog futures finished mixed with some profit taking seen on the front month contracts. Prices closed soft, and could see additional selling pressure to start the week. However, the cash market stays red hot, supporting the May futures. The cash hog index gained 1.66 on the week for its 14th consecutive higher weekly close. On Friday the index added .66 to 108.55. Pork carcass cutout values closed softer after midday strength, dropping .07 to113.76. Pork carcass values trended higher last week as the demand for pork domestically and in the export market keeps the product moving. Estimates for slaughter Friday was 462,000 head and for the week at 2,393,000 head, both totals running under last week, helping add to the strength in cash. Despite the profit taking Friday, the fundamentals keep the door open as the trend is higher. We view the top is still not in at this time.
Author
Matthew Strelow