CORN

Without confirmation of large China purchases yet, corn markets are taking moderate losses this morning. May is down 0.0475 to 3.145, July is down 0.045 to 3.215 and Dec is down 0.0375 to 3.35. If China were to purchased the reported 20mmt of corn previously indicated, this would help to lighten the balance sheet to a meaningful degree. However, reports of ethanol plants continuing to close down does not help to provide support to corn prices. ADM announced that they will idle two plants, and employees at those plants are expected to be furloughed for four months. Planting activities through most of the corn belt have progressed without a hitch, though many areas are shut down today after rains overnight. July corn futures posted a relatively weak close yesterday below the 10-day moving average resistance level. July opened above the 10-day this morning but quickly fell back below yesterday’s range. Momentum indicators are still pointing lower, and at this point, the bounce seen earlier this week looks like nothing more than a brief correction. Funds were thought to have bought about 3,000 contracts of corn yesterday.

SOYBEANS

Soybean markets look soft this morning after unsuccessful tests of overhead resistance yesterday. May is down 0.0625 to 8.33, July is down 0.0725 to 8.395 and Nov is down 0.06 to 8.42. China has bought beans from the US two days in a row, but the amounts have not been large enough for traders get too excited yet. Soybean meal in China is trading at levels not seen since 2012, so US beans should be attractive, especially as China works to rebuild their hog herd. The Brazilian real has sunk to new all-time lows for three sessions in a row now, keeping a lid on US bounces. Yesterday’s unsuccessful tests of the 10-day moving average resistance levels were disappointing, and likely attracted more technical selling this morning. July beans opened above the 10-day this morning, but were met by heavy selling early on and have since pulled back to prices last seen on Tuesday. Funds were thought to have bought about 4,000 contracts of soybeans yesterday.

WHEAT

Wheat markets are lower with the rest of the grains complex this morning, with May CHI down 0.045 to 5.425, May KC is down 0.06 to 4.795 and May MPLS Wheat is down 0.045 to 5.01. French winter wheat conditions were reported at 58% G/EX this week vs 61% last week and 79% last year. In addition, Black Sea and Russian wheat crops have been short on moisture and production estimates have been creeping lower. However, Kansas, Oklahoma and Texas are expected to see rain in the next two weeks and Australia is expected to raise 51% more wheat this year than last year. Chi wheat markets continue to hold together better than the others, with prices still consolidating within their recent range while hard red futures and spring wheat futures are extending recent downtrends. Funds were thought to have bought about 1,000 contracts of Chi wheat yesterday.

CATTLE

Cattle markets are down again today, with the nearby April live cattle contract pricing in further declines in the cash market ahead of expiration next week. April lives are down their expanded 4.50 limit to 84.45, June lives are down 1.60 to 81.32 and August lives are down 0.52 to 87.92. May feeders are down 0.80 to 116.47 and August lives are down 0.87 to 125.55. Cash cattle have traded so far this week at 95-100 in the country, so the discount is widening very quickly, especially considering last trading day is next Thursday. Slaughter plants have had trouble staying open, and slaughter this week is running 10% behind last week and 29% behind the same week last year. Beef values are at record highs as grocers secure supplies ahead of more possible plant closures. June lives briefly tested their 10-day moving average resistance level this morning, but quickly sold off and have extended the recent losses. Stochastics have now turned lower and the path of least resistance looks lower. May feeders are trading directly at their 10 and 20-day moving average levels in a very tight range.

HOGS

Hog markets are mixed this morning, though have avoided a collapse with rather impressive determination so far. June hogs are down 0.05 to 51.57, July is down 0.07 to 54.30 and August is up 0.62 to 58.50. The cash index is continuing its trend higher despite worries that plant closures will impact demand for slaughter supplies, especially those procured on the open market rather than from packer-owned inventories. Hog slaughter this week is running about 17% behind the same week last year, much better than cattle slaughter, though this is likely due to the increase in slaughter capacity for hogs over the past 12 months. Pork values are rallying as well, though not at nearly the pace that beef markets are reacting to lower production. June hogs are lower on the day, but after a successful test of the 20-day moving average level this morning, not real technical damage has been done, In fact, the test this morning may be indicative of a market that is trying to carve out a near term bottom.

Author

Lisa Heder