CORN
Corn futures are firm this morning with Sept up 2-1/4 cents to 5.45 where the contract’s 100-day moving average is situated. The contract is now trading nearly 15 cents off yesterday’s low of 5.31-1/2 which is where a line of support is building at the May and June lows at 5.25 and 5.28, respectively. Dec is up 3 to 5.34 versus that contract’s 100-day MA support at 5.27. The corn crop has improved over the last few weeks in many areas, but face an uphill battle in others. The USDA will estimate yield on Monday in the July WASDE report. The agency may keep U.S. corn yield near trend at 179.5 after recent rains. Most private estimates are near 175-177. The trade also looks for US 2020/21 corn demand up 100 mil bu and 2021/22 up 300 mil bu. U.S. 2021/22 corn carryout may come in closer to 900 mil bu vs 1.357 bil. Today, we’ll get Ethanol Stats followed by Weekly Exports tomorrow.
SOYBEANS
Soybean futures are mixed this morning. Aug beans are mostly steady at 13.66-1/2. Nov has been choppy and is down 2-1/2 to 13.24-3/4. Chinese bean futures were up 20 yuan ; Soymeal down 5; Soyoil down 2. Malasyian Palm prices overnight were down 24 ringgit (-0.63%) at 3771 fluctuating between gains and losses, with investors weighing prospects for weaker demand with the impact of coronavirus-related restrictions on production in second-largest grower Malaysia. News that Chinese farmers have switched hectares from beans to corn is giving some support to the bean complex. In addition, There are rumors mid-week of China asking for U.S. new crop soybean prices. Lower USDA crop ratings and a ridge of high pressure that may be in the works in the north plains and upper Midwest is also buoying the market. Technically, futures are looking more and more neutral as consolidation forms around respective 100-day Moving Averages. Talk that late next week, a ridge of high pressure could form in north plains and upper Midwest may also be offering support.
WHEAT
Winter wheat futures are firm this morning and continue to consolidate inside Monday’s lower trading ranges. The Sept Chicago contract is up 2-1/2 cents to 6.24-3/4. Sept KC is up 6-1/2 cents to 5.91. Sept MPLS Spring wheat is up 5-3/4 cents to 8.13-3/4 while trying to fill a large gap on the charts from Monday’s sharply lower start to this holiday-shortened week of trading. Nearly 100% of the spring wheat crop is experiencing some form of drought and despite some recent rainfall, the damage has likely been done to this crop. Beyond cropland in the U.S., the Canadian Prairies have also been dealing with persistent dryness. With the recent push lower in prices, spring wheat also saw some profit taking and value removed, but may be set again to push higher. The biggest limiting factor will be the developing harvest for winter wheat and Soft Red wheat harvest, which have been showing good yields. In tender activity, a group of importers in Thailand is believed to have purchased about 65,000 tons of optional-origin animal feed wheat in a tender for up to 230,700 tons which closed on Wednesday. South Korea’s Major Feedmill Group (MFG) purchased about 65,000 tons of animal feed wheat to be sourced from optional origins in a private deal late on Tuesday without issuing an international tender. The U.S. dollar is on the upswing, thus weakening U.S. export power in the global marketplace.
CATTLE
Cattle futures are called steady to lower. The cattle market saw some technical damage yesterday, and the potential for more downside price movement is a possibility. The price action going into the end of the week will be a key. Live cattle futures broke lower to challenge support levels. August held 100-day Moving Average support, but closed to its lowest point since June 14th. The cash market started to see some development on Wednesday, and early indications were disappointing at $120-122 in Texas and Kansas, with $124 bids in Nebraska. This was trading fully steady with last week, but disappointing to the market. Carcass values were mixed at midday, but closed softer, and Choice beef dropped 1.78 to 284.90 with Select beef 1.23 lower to 262.08. Movement was improved at 158 loads. Boxed beef values finding some support will be key to stabilizing the market and preventing a potential break lower. Feeders finished lower as well with triple-digit losses amid profit-taking pressure.
HOGS
Hog futures are called mixed after giving up much of Tuesday’s gains yesterday. The weakness in retail values should keep the market from rallying today. August hogs are still building a bottom, and yesterday’s weakness may bring a test of those recent lows. The technical chart for the August contract looks more concerning as a bearish pennant forms that could open the market to a further break lower. Pork carcass values closed firmer, trading 2.13 higher to 115.74. Movement was moderate at 278 loads. The firmer close should offer some support to futures on the open. The cash hog market has been soft as packers bidding up to find hogs and will likely continue to run chain speeds of around 470,000 head per day. The Lean hog index stayed soft losing .45 to 110.81 narrowing the premium over July 1.66 ahead of contract expiration on the 15th. August is still supported at a $10 discount to the index.
Author
Matthew Strelow