CORN

Corn futures were down a penny overnight after succumbing to a round of profit taking and long liquidation on Tuesday.  Funds were sellers of an estimated 15,000 corn contracts, increasing their second largest holding on record to an estimated 274,000.  Current weather forecasts and improved crop ratings combined with pressure from other markets aided in the turn around in corn prices.  Weather is not a limiting factor at this time, but a close eye will be kept on long term forecasts predicting a warm and dry end to June into July.  We’ll get Weekly Ethanol Stats today, Exports and the June USDA Supply/Demand report tomorrow.

SOYBEANS

Soybean futures are firm this morning while posting gains of 1 to 3 cents overnight thanks to new lows (for the move) in the dollar against an uptick in the Brazilian real, thus making U.S. soybeans more competitively priced.  Wires report China bought 120,000 tons of U.S. soybeans.  Currently, South American bean supplies are running about 50 cents higher.  Improving  soybean crop conditions and the absence of export announcements has spilled some of the wind from the sails of the market, but prices are arguably in an up-trending pattern.  Nov beans, at 8.77-3/4, are facing stiff resistance in the form of the contract’s downward sloping 100-day moving average at 8.80-3/4.

WHEAT

Wheat futures were up 3 to 5 cents overnight despite heavy global supplies and favorable weather that will allow U.S. winter wheat harvest to progress quickly.  Much of the HRW wheat region will likely be dry Wednesday through June 19 other than a few isolated thunderstorms followed by some increase in thunderstorm activity mostly in northern and eastern parts of the region.  Australian analysts raised their production forecast for the 2020/21 season after heavy rains broke a three-year drought.  Front month Chicago wheat broke technical support on Tuesday leaving the market susceptible to additional selling pressure.  If it were not for the shrinking value in the U.S. currency, wheat prices might be facing steeper losses.  In tender activity, Egypt seeks optional-origin wheat; Philippines seek 168,000 tons of optional-origin feed wheat; And, Thailand passed on 240,000 tons of optional-origin feed wheat.

CATTLE

Live cattle futures are called steady to higher as more normalized slaughter volumes develop. The lack of deliveries against the June contract brought buying support into the cattle market on Tuesday.  August and October cattle had a friendly technical close, and could see additional follow through buying today.  Cash was undeveloped on Tuesday and will likely lead the trend in cattle prices for the week.  Today’s on-line cattle auction will be watched for cues.

HOGS

Lean hog futures are called steady to weaker in keeping with the defined trend in the July contract due to cash weakness and large slaughter supplies. These nearby contracts are testing support and could find some stability, but the fundamentals are not supportive.  Packer margins have tightened as retail values have corrected back to last year’s level.   Deferred contracts are building a higher trend on an improved technical picture and the prospects of longer-term demand.

Author

Matthew Strelow