Provided by Stewart-Peterson Inc.
CORN
Corn futures eased overnight following a few days of corrective action. We’ll get the July USDA monthly Supply/Demand report today at 11 AM CT. The agency is expected to increase U.S. corn acres/crop and carryout. Weekly crop ratings stayed at 64% Good-to-Excellent. Sept and Dec corn futures are down 7 cents to 6.30 and 6.22, respectively. On Monday, Managed funds bought 5,000 corn putting their net long position at an estimated 200,000 contracts. U.S. stocks are lower before U.S. CPI data and key Bank earnings. Renewed talk of inflation and recession is weighing
on stocks, energies and grains. Copper the global economic indicator is making new 2 year low. Soaring activity in the dollar to new multi-decade highs is also noted. The greenback is up 12% in 2022.
SOYBEANS
Soybean futures traded lower overnight with August down 19 cents to 15.03 and Nov down 19-1/4 to 13.85-3/4. August soymeal is down 3.30 to 429.60. Aug Soy fell 1.06 to 62.66. On Monday, Managed funds were net sellers 2,000 soymeal and bought 5,000 soybeans and 4,000 soy oil. They are now estimated to be net long 128,000 soybeans, 76,000 soymeal and 41,000 soy oil. U.S. Weekly Crop ratings shrunk for beans from 63% Good-to-Excellent to 62%. USDA could lower U.S. acres, production and carryout today. Chinese Ag futures (SEP 22) Soybeans down 71 yuan; Soymeal up 14; Soy oil up 26; Palm oil down 118; Corn down 17; Malaysian palm oil prices overnight were down 19 ringgit (-0.46%) at 4138.
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WHEAT
Winter wheat futures traded 15 cents lower overnight to 8.41-1/2 in the September Chicago contract and 9.00-1/4 in the actively traded KC contract. Sept MPLS wheat was down 20-1/2 cents to 9.43-1/4. On Monday, Managed funds were net sellers of 12,000 Chicago wheat and are estimated to be net long 8,000 SRW contracts. Headwinds from new highs in the dollar is keeping prices trading in a wide range. U.S. spring wheat is rated 44% heading versus 81% last year. The key USDA number today is in World wheat stocks. USDA will issue its first U.S. 2022/23 wheat supply and demand by class. Importers are seen adding coverage with the large French vessel line up and increased German sales. EU and Russian wheat yields are higher than expected, but protein levels lower.
CATTLE
Cattle futures are called mixed to higher as technical buying ensues after support held under the live and feeder markets. Strong price action is the key to the start of the week with futures posting a trading range outside of Friday’s range and closing at the top end of the daily range. This will likely lead to additional buying support today. These reversals involve money flow as speculators view price as a value. Weekly Commitment of Trader’s report shows Live cattle spec traders holding 14,000 long contracts, near the lowest point for the year. That alone could trigger some value buying. Front-end cattle supplies keep the market cautious. Estimated slaughter for Monday was 125,000 head, up 6,000 from last year. Those supplies, especially in southern cattle, keep a lid on the cash market. Retail values were firmer at midday and held some gains into the close with Choice gaining .25 to 268.14 and Select 1.15 higher to 243.00. The Choice/Select spread stays wide at 25.14 reflecting the lighter cattle weights. The load count was light at 113 midday loads. The strong start to grain market pressured the feeder complex. The Feeder Cash Index was 3.82 higher to 172.21, this followed a strong move higher on Friday. The ongoing talk of strong cash feeder prices in the countryside helps support this market overall. Cash will still be king for the current price strength or weakness. We will hold our near-term defensive positions, especially given the supply of cattle in the near term.
HOGS
Hogs are called mixed. Futures were mixed to mostly lower to start the week as pending July expiration, flattening cash market limited futures gains. The market is at a point to break out higher or correct back to the bottom of the range. Monday tested support to the downside and held. The market started pricing in a possible peak to the cash market last week, as prices have moved into range-bound trade. August hogs tested and held support at the 50-day moving average under the market, and finished lower, but middle of the range. Price will likely consolidate here as well on Tuesday’s session open. The deferred contracts may be ready to surge higher on a possible breakout over resistance. With the expiration of the Jul contract on July 15, it is tied to the cash index. The cash hog index gained .81 to 110.97 but is still trading at a discount to the July futures. Cash markets were softer on morning direct trade on Monday. The weighted average price move lost 4.51 to 114.07 in the morning. The 5-day rolling average is currently 118.54. The cash market has turned choppier and may be finding a top. Pork carcass values were softer at midday, but firmed to close slightly higher gaining .40 to 115.07, on a load count that was moderate to good at 330 loads. The firming retail should support the Tuesday open.
Author
Matthew Strelow