CORN
Corn futures traded two-sided overnight and are currently in the midst of a technical bounce this morning. July corn slipped to 20-day moving average support at 6.66 overnight, adding to Thursday’s limit-down price plunge, but is currently 9 cents higher to 6.83-3/4 as the market attempts to shrug off a ‘risk off’ day of losses. Dec corn is up 14-1/2 cents to 5.72-3/4, near the overnight high of 5.74-1/4. The overnight low came in at 5.49-1/2. The dollar is down 18 points while taking back mid-week gains and crude is higher. Despite the rapid planting progress this spring, dry weather in some areas and less-than-adequate subsoil conditions favor more price volatility. For now, a distinct top has formed in the corn market charts that will serve as a selling signal for farmers looking to further capture this year’s robust profit opportunity. For the week, the new crop Dec contract is down nearly 65 cents from Friday’s contract high.
SOYBEANS
Soybeans are rebounding this morning. Overnight, July beans rose 28-3/4 cents to 16.12-3/4. Nov beans are up 17 cents to 14.13-1/2, but down about 75 cents for the week. Meal and oil contracts are also higher, rounding off strength in the complex. Soybean futures did make a new high this week and the reversal lower when fund selling was trigger, yet the market is quickly showing signs of maintaining its bullish posture as upward-trending 10-day moving averages hold support. Funds were net sellers of 42,000 soybeans. Bottom line, USDA failed to give bullish traders news on the May report, and It is now a weather market with the U.S. two-week forecast mostly favorable.
WHEAT
Wheat futures regained half of Thursday’s sharp losses overnight. July CBOT wheat is up 19 cents to 7.20-1/2. KC wheat is up 16-1/2 cents to 6.74-1/4. July MPLS is up 19 to 7.60-1/4. Corn price movement is a leading indicator of wheat direction as wheat traders look to overcome a sharp down day. In the short term, weather looks favorable for improving crop conditions featuring plenty of rain for KS and OK, so look for this outlook to create headwinds to the bullish trend. In addition, SovEcon raised their forecast for the Russian wheat crop by 1 million tons to 81.7 million tons this week.
CATTLE
Cattle futures calls are for mixed values after finishing sharply lower on Thursday. The commodity complex was hit with a round of risk off trade, pressuring the majority of ag commodities. Front-end cattle futures traded at limit down for a portion of the session, before being lifted off those lows. Regardless, the complex still had strong triple-digit losses. The difficult close damaged the charts technically, and Friday’s price action will be key going into the weekend. Light cash trade was being reported on Thursday afternoon, with Nebraska posting some $120 trade and Kansas at $119, while the rest of the country remains quiet. The trend is steady to slightly higher over last week. Wholesale carcass values were mixed on the close Thursday with Choice carcasses gaining 1.70 to 316.78, but Select was 1.25 softer to 295.91. The Choice/Select spread continues to widen, possibly reflecting a more current feedlot. Weekly export sales reported on Thursday morning failed to affect the market. New beef sales were at 13,100 mt, down 22% from last week, with Japan and China as the top buyers on the week. Weekly export shipments total 17,700MT, down 4% from last week.
HOGS
Hog calls are steady to higher after suffering triple-digit losses. June hogs slid down to fill the price gap from May 3rd, fueled by profit taking and technical selling pressure. The fundamentals supporting the market are still very strong. Retail carcasses surged higher at midday, and held most of those gains into the close. Carcasses gained 2.08 to 116.19, just short of all-time highs set last year. Movement was moderate at 222 loads. Weekly export sales were soft this past week, but China was on holiday for a large portion of the week. New sales through May 6th totaled 14,700 mt with Mexico and China as the top buyers for the week. Export shipments stayed supportive at 41,900 MT, up 13% from the prior week. The overall demand tone helps support the cash market. The Lean hog index gained .22 to 110.95, setting the stage for a 15th consecutive week with a higher close. Thursday’s selling pressure was more technical than based on fundamentals. Some damage was done to the charts. We view the top is still not likely established yet, based on the fundamentals, but the price action may be starting to show that it could be near.
Author
Matthew Strelow