CORN
Corn futures stayed the course overnight with modest gains keeping the uptrend intact. July is up 3 to 7.00, and Dec is up 5 to 5.85-1/2. A wire story sums up the start of the 2021 growing season: U.S. farmers are ahead of schedule in planting the 2021 corn and soybean crops to kick off May, the busiest planting month. The weather forecast is not exactly wide open to facilitate seamless planting in the coming weeks, but attractive prices may override those imperfections. The widespread dry soil conditions have been both a blessing and a curse since planting is more efficient, but pressure is higher to receive sufficient moisture down the road. A flip to a wetter pattern right now would help the newly sown crops, and it might not necessarily derail planting plans either, given strong profit potential. Other headlines read: Taco shells will be in short supply this summer in grocery stores as demand for corn – a key product in anything from fuel to animal feed, as well as your favorite tacos – paired with supply-chain woes makes the product even more difficult to produce. China is leading a surge in demand as it seeks to replenish its swine herd. Demand for the grain has surged in recent months. Increased interest from China, as well as a combination of poor weather and labor shortages, has made the key crop an increasingly valuable commodity. Major corn producers in Brazil and Argentina have been facing difficulty finding people to work the fields amid the COVID-19 pandemic.
SOYBEANS
The bean complex was up overnight while taking the path of least resistance – higher. July beans rose 12 cents to 1.505-1/4. Nov was up 7-1/2 cents to 13.70-3/4. Meal contracts gained 3 to 5 dollars per ton; and, soyoil was up 20 to 30 cents. Chinese Ag futures remain closed for holiday until tonight/Thursday. Malaysian palm oil prices were up 3 ringgit at 4,045 (basis July) at midsession in quiet trade. The USDA’s latest forecast is for U.S. soybean exports to be about 600.0 million bushels higher than last year, but a slowdown in the U.S. export program offers resistance. Crushing margins remain good and U.S. soybeans crushed in March totaled 188.2 million bushels. Contract highs remain bullish targets for the market as traders adjust to expanded limits enacted on Monday moving forward in the grain and oilseed markets. Currently, Managed Money is net long an estimated 180,000 soybeans; 50,000 soymeal, and; net 107,000 soyoil.
WHEAT
Winter wheat futures were choppy overnight. Spring wheat was up 6 cents to 7.74-1/4 (July). Dec MPLS wheat, currently at 7.79, tends to top in late May or early June. IHS Markit (Informa) will issue its May U.S. and world crop reports today at 10:30 am CT. The USDA May 12 report will contain NASS’s first U.S. 2021 winter wheat production forecast. Meanwhile, beneficial precipitation is still expected through Sunday from north-central Montana into South Dakota and southwestern North Dakota. Central and northwestern North Dakota and far northeastern Montana will likely miss out from at least some of this notable precipitation. Last evening’s GFS model run was then drier in a large portion of the Northern Plains May 12 – 14 and May 17 – 19. Tender activity has Taiwan seeking 89,425 tons of U.S. wheat, Thailand seeks 455,000 tons of optional-origin feed wheat; and, Philippines bought 60,000 tons of optional-origin wheat.
CATTLE
Cattle calls: steady/lower. Cattle finished lower, led buy a strong sell off in the Feeder cattle market. Deferred contracts were also under pressure, but with marginal losses in a heavily bear spread markets. Prices broke down technically, and the front month contract is trading at its lowest levels since January. The June futures contract broke under the June Lean hog futures contract for the first time since 2001 on today’s close. Cash trade started developing with light southern trade reported at $119, steady to $1 higher than last week. Northern trade saw dressed trade at $190, steady with last week. The lackluster cash market keeps the selling pressure present in the live cattle contracts. Retail demand is still very strong and beef carcasses reflected that yesterday. Choice carcasses gained 1.92 to 301.22, and Select was .12 higher to 283.91, but that strong retail values failed to support the market, but could lead to some value buying today.
HOGS
Hog calls are for steady to higher trade on follow-through. Futures finished strong again on Tuesday as prices pushed to new contract highs. Tuesday was the first time since 2001 that June hogs closed higher than June Live Cattle. The Cash market is staying on its upward path, and the lean hog index was back in positive territory, gaining .21 to 107.10. May futures are trading at a 4.050 premium to the index, and that may limit the futures gains. China is dealing with longer-term issues of ASF, and the demand prospects stay elevated into the summer. Chinese pork prices are trending higher, fueling hog futures prices. Pork carcasses were quiet, but softer, dropping .48 at midday to 111.82, on firm demand of 428 loads, the largest load count in the past couple weeks. The technical picture looks strong, and the money flow is supporting the hog market. Prices are overbought, and may be due for a correction, but the market is still looking for a sign of a top.
Author
Matthew Strelow