CORN
Corn futures were firm with Jul up 5-3/4 cents to 7.81 and Dec up 4-1/2 to 7.23-1/2 in a bid to move back up to 10 and 20-day moving average resistance ahead of Thursday’s May WASDE report. The trade estimate for 2021/22 carryout is near 1.412 bil bu vs USDA 1.44 bil. 2022/23 production is estimated to be around 14.773 billion bushels, using a 179.6 average yield. Some analysts doubt USDA will drop U.S. corn yield from 181 vs crop watchers’ 177 BPA. USDA has used their outlook corn yield on the May report every year since 2014. We’ll see how the agency handles Ukraine’s 2022/23 corn exports. The market looks like it may need some new bullish news to attract buyers and the path of least resistance may be lower in the short term if planting can catch up. The dollar is down 42 points , crude is up 2.33 and wheat is posting double-digit gains while offering some outside market support. Weekly Ethanol Stats will be out later this morning, Exports tomorrow. Managed funds are estimated to be be net long 331,000 corn contracts.
SOYBEANS
The soybean complex traded firmer overnight while correcting from an oversold condition. Bullish traders were anticipating some type of supply news which might support their bias in the near-term, and there is now talk of China asking for U.S. old and new crop soybean prices. China domestic soymeal stocks are down having fallen below last year. July beans were up 10 cents to 15.02-1/4 last night. Nov gained 11 cents to 11.65-3/4. July Meal gained 1.40 to 402.90 and July bean oil was up 1.24 to 82.28. Soybean meal futures have been one of the weakest performing ag markets in recent weeks, as the July contract has fallen back near $400.00. This is off the contract high of $484.60 posted in late March as it is on pace for five straight weeks of lower trade, bringing the front-month chart to its lowest point since January. 2022/23 soybean production is estimated to come in at 4.613 billion bushels on Thursday’s report with an average yield of 51.4 BPA. 2021/22 ending stocks are expected to be down from April with an average estimate of 225 million bushels vs. 260 mb last month. While the technical action has been rough, the markets are overdue for some retracement higher. On Tuesday, Managed funds are estimated to be long 148,000 soybeans, 57,000 soymeal and 86,000 soy oil.
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WHEAT
The wheat complex was up overnight. July Chicago gained 18-1/2 cents to 11.10-3/4. The KC contract was up 15-1/2 cents to 11.90-1/2. July MPLS wheat was up 12-1/2 cents to 12.26 after falling just shy of Monday’s contract high at 12.34-3/4. Monday’s Crop Progress report raised the winter wheat condition 2 points, although there are still some major concerns for some KC wheat regions with hot and dry weather following an arid winter. Ongoing dryness could lower the U.S. HRW crop outlook. EU, Brazil and Argentina are dry. India, Pakistan, Bangladesh, N Africa and Middle east are also dry. Major World wheat buyers have little forward coverage and with a big question mark hanging at the end of what Black Sea supplies will look like this year, we look for wheat prices to remain buoyant. Thursday’s Supply/Demand report has an average trade estimate for 2021/22 ending stocks of 686 mil bu, down from 678 mb last month. On Tuesday, Managed funds were net buyers of 3,000 Chicago wheat and as of yesterday’s close, estimated be long 37,000 wheat contracts.
CATTLE
Cattle futures are called mixed in an attempt consolidate after a lower start to the week. August live cattle at 134.10 are down, trading below the 200-day Moving Average drawn at 135.13. The move has countered the stability in the cash market and created a wider discount of futures to the index. Higher volume slaughter is weighing on box prices. Last week’s slaughter at 657,000 was 20,000 head more than the last year. Sluggish demand is also weighing on sentiment and keeping bullish technical traders from buying back into the recent rally. Improving pasture conditions, now up to 22% Good-to-Excellent from 18% the previous week is a function of recent moisture in the central and southern Plains. A slide in boxed beef cutout values is also noted.
HOGS
The hog market is called mixed after finding some late-session buying on Tuesday, allowing nearby contracts to end the day in positive territory. Prices had arguably fallen into oversold territory suggesting a increased chance for traders to begin selecting price levels that represent a bottom in the market. Hook reversals formed which may lead to, at least choppy trade today. Pork cutouts were down $2.09 on the day and heavier than normal weights augmented by lighter export demand needs to work its way through the system. Weekly Export Sales tomorrow morning will shed more light on near-term movement. Technically, June hogs, at 101.575 are now situated and stabilizing at 200-day Moving Average support after testing and then breaking through that barrier in recent days.