CORN
Corn futures were up 3-1/2 cents overnight, overcoming Monday’s weak start to the week. Sept corn eclipsed Tuesday’s high getting to 5.76-3/4. The next area of resistance is around 5.81-1/4 and 5.88-1/4 with first support at 5.62-1/4. The corn market maintains a positive tone heading into a routine Weekly Ethanol Statistics report today and Exports tomorrow. Output projections for the week ending July 16 seen slightly higher than last week at 1.042 million barrels per day. Stockpiles’ average estimate is 21.377 mil bbl versus 21.134 mil a week ago. Last night, Dec corn reached 5.71-1/4, underpinned by hot, dry conditions for the Dakotas, MN, NE and parts of IA that could cause the crop to deteriorate into August. There are also concerns out of Brazil where the Safrinha corn crop just experienced another frost event. On the bearish side, the U.S. dollar is strengthening, and demand is slowing down out of China as their corn price continues to fall. Spot basis bids rose on Tuesday for corn loaded onto barges and shipped down Midwest rivers to the U.S. Gulf, while soy barge bids eased, dealers said.
SOYBEANS
Soybeans were down a nickel overnight. Aug beans, at 14.38 are sticking to the contract’s 50-day moving average, while Nov, at 13.82-1/4 hovers just above it’s 50-Day MA support. Prices are slumping slightly amid a technically overbought situation after putting in a healthy up-trend since bottoming out a little over a month ago. In addition, a cool spell has spread across the U.S. Midwest mid-week. Looking ahead though, the 2-week forecast is hot and dry for the NW belt. There are also chances that in August the ridge could expand to the east. In South America, drought conditions in Argentina have shrunk the Parana River to it’s lowest water level in 77 years which may be offering some support to the bean complex. The river is a key artery and is experiencing an impact on shipments of cereals including soy and wheat. Overnight, Chinese Sept bean futures were down 44 yuan ; Soymeal up 6; Soyoil up 68; Palm oil up 48; Malaysian palm oil prices overnight were unchanged at 4151 with signs of weakening exports from Malaysia, the world’s second-biggest grower.
WHEAT
Winter wheat futures traded 4 to 6 cents higher overnight, Spring wheat down 3 to 4. NASS rated the U.S. spring wheat crop at only 11% Good-to-Excellent, down from 16% last week and 69% last year. This is only 1% above the record low in 1988. Rain in north/east North Dakota has stalled the rally in MPLS wheat, but the rains are too late to help. Next week is the Annual North Dakota crop tour. Meanwhile, with winter wheat harvest in the final stretch of being completed, the spring wheat rally has helped keep a bid under Chicago and KC markets. We are keeping an eye on the strength in the dollar as a form of resistance over the wheat complex. Up north, some cereals are being cut for livestock in the Canadian Prairie province as drought concerns persist and crop-yield forecasts are lowered, according to the Manitoba government on Tuesday.
CATTLE
Cattle futures are called steady to weaker as the market fails to find traction. The cattle market has been looking for news to lift prices, but the same tone in cash and weaker boxed beef values continue to dominate the market tone. We’ll get a Cattle on Feed report Friday. With the weaker closes, charts are experiencing some technical damage, and prices are pushing downside support levels, if these fail to hold, further long liquidation could push the cattle markets lower. The country cash market remains quiet to start the week as bids and asks are still relatively undeveloped. Some southern asking prices have been seen at $120, but lack bids. Rumored talk of $125 trade in the north as a starter is unconfirmed. The expectations are for steady to softer trade, which is pressuring the market overall. Retail values have stayed under pressure, especially the Choice boxes. At the close, boxed beef values were lower, with Choice trading 1.61 lower to 264.88 and Select dropping .91 to 248.58. Demand was light at 152 loads.
HOGS
Hogs are called steady to higher after finishing higher, gaining back most of the premium lost on Monday. Improving fundamentals are supportive of the hogs market as prices are building off recent low, and technically, the market is improved. The cash market and lean hog index have been firming. The index gained .42 to 112.26, and is trading at a 7.38 premium to the August futures, which should stay supported. National average hog prices were 109.84, up 3.60, and tighter hog numbers are encouraging packers to bid up for hogs. Pork cut values have been trending higher, but were softer midday, and held that weakness into the close losing 1.51 to 120.34. The load count was moderate at 340 loads. The softer tone could pressure opening prices today. However, on-going talk of ASF issues in China and the prospects of improved longer-term demand may have the hog market undervalued. The move higher in October hogs give that contract its first higher close since June 16. The strong discount of October hogs to the August contract is naturally supportive, especially with the strength in the cash market.
Author
Matthew Strelow