CORN
Corn futures rallied overnight on the heels of a big jump in wheat. July and Dec corn were up 14 cents to 7.41 and 7.04, respectively. The market has the feel of testing their highs on increased demand before U.S. harvest. Most doubt USDA will make big changes on the June 10 WASDE report, but private analysts estimate U.S. 2021/22 corn carryout near 1.375 bil bu vs USDA’s 1.440 and 2022/23 near 1.200 vs USDA 1.360. Added acres and yield may bump up the US 2022/23 corn carryout closer to 1.630. We’ll get Weekly Export Inspections later this morning. The U.S. extended weather models show a ridge building across south central Midwest on 10 days from now. However, the jet stream is still too fast to build a persistent ridge. This may change, or slow down toward the end of the month. Below normal rainfall is expected in SD, NE, IA, MN, WI and IL. Central Brazil is dry. Crude is making new highs and could test 125 then 147 and could even eventually test 170 this winter. The U.S. dollar is lower. Stock index futures are higher, aided by supportive jobs data.
SOYBEANS
The soy complex was up overnight. July beans rose 18 cents to 17.15-3/4. Nov was up 14-1/2 cents to 15.41-1/2. Jul meal gained 3.10 to 411.00, and July bean oil gained .52 to 82.37. Nearby beans are back over 17.00 on talk of China relaxing some Covid restrictions. Nearby soybean futures all-time high is 17.94. Dalian soybean futures are lower while soymeal and soy oil are higher, improving crush margins. U.S. old crop unshipped soybean sales are near record and new crop is record high. Don’t look for USDA to make major changes on June 10. However, some private analysts estimate U.S. 2021/22 soybean carryout near 200 vs USDA 235 and 2022/23 near 200 vs USDA 310.
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WHEAT
Wheat futures were up sharply overnight. Russia bombed key Ukraine ports and grain facilities over the weekend, thus ratcheting up the turmoil in the war and keeping volatility alive and well in the grain markets. Many African and Middle East countries rely on Ukraine exports buyers are caught short amid lower Black Sea and EU exports. Some North Africa countries need loans to buy wheat. Nearby July Chicago and KC wheat is up 50 cents this morning to 10.90 and 11.71, respectively, to get those contracts back to their 50-day moving averages. On Friday, Managed funds were net sellers of 5,000 Chicago wheat and estimate to be net short 12,000 contracts. MPLS Spring wheat was up 42-1/4 cents overnight to 12.34. The U.S. 30-day forecast calls for normal rains KS, OK and MO. North China plains are dry and the EU is turning dry with temps warming.
CATTLE
Cattle futures are called mixed following last week’s choppy trade into the end of the week. Feeder cattle were firm, trading higher for the 3rd consecutive day, finishing a strong week. There was moderate fed cattle cash trade in the North at mostly $138 to $140 live and $222 dressed. That is mostly $2 lower compared to the previous week. Light to moderate volumes traded in the South at mostly $135 live – mostly $2 softer than the previous week. The Choice cutout increased $2.51, while Select increased $4.28 on strong Memorial Day sales and good grilling weather across most of the country. The cattle market has benefited from money flow and short covering, especially in the feeder market as managed money positions was hold a small long position in live cattle, and trading short in feeder cattle. A strong tone in grain markets last night, may pressure the open in the cattle market, if the strong grain market open can hold into the 8:30 open. Cattle have looked to put in a seasonal low, it will still take the cash market tone and retail demand to determine the strength of the recovery.
HOGS
Hog futures are called steady to higher. The near-term low is in for the hog markets, the next question is going to be, how far can we rally? Resistance held prices in check into the end of last week, but the strong cash and retail tone can be enough to push price to another level. The July hog contract ran into resistance again at the 50-day moving average at $113.200 and hasn’t traded over that level since April 22. This moving average has acted as a swing point in the market. Prices slid back through the 100-day moving average but found support on the 10-day moving average. The weaker price action may offer resistance today after futures have rallied over $12.000 off the recent low. The cash market has been supported under the hog futures. Midday direct trade was softer to end the week, losing 1.21 with the weighted average price at 112.64 on Friday, and the 5-day average moved higher to 112.50, showing the recent strength. The CME Lean Hog Index gained .12 to 105.03, and for the week, the index traded .63. The June contract will stay limited by its premium to the cash market, trading at $5.170 premium on Friday. Pork carcass values have been strong, and at midday on Friday, carcass values added another 3.38, but closed down 2.64 to 109.40. Movement was moderate at 209 loads. Carcasses trading at $109.00, this is nearly $3.00 over last Friday’s trade, even with the big swing in Friday’s values, but the softer close may pressure the market on Monday’s open. The USDA released weekly export sales numbers on Friday morning before the market open and posted new net sales of 31,900 MT for 2022 were down 13% from the previous week, but up 15% from the prior 4-week average. Mexico, China, and South Korea were the top buyers of US pork last week.
Author
Matthew Strelow