CORN

Corn futures are trading a bit lower this morning, in characteristically tight trading ranges. July corn is down 0.0175 to 3.225, September corn is down 0.015 to 3.27 and Dec corn is down 0.0125 to 3.3675. Energy prices are running into overhead resistance this morning, and a lack of threatening weather forecasts for the Corn Belt are keeping price action relatively quiet. However, as of last Tuesday, managed funds were holding a net short position of over 276,000 contracts which makes the corn market very sensitive to bullish developments and is likely keeping prices supported despite the lack of bullish news. Ethanol production and usage are still much lower than last year, but ethanol stocks have returned to normal levels. July futures tested support early this morning at the 10-day moving average level and have since rebounded near the highs of the day. Still, July corn has only traded within a 0.0325 range today. Funds were thought to have bought about 2,000 contracts of corn yesterday.

SOYBEANS

Soybean futures are trading slightly higher this morning, trying to follow through on yesterday’s impressive technical strength. July beans are up 0.03 to 8.535, August beans are up 0.0325 to 8.56 and November beans are up 0.0325 to 8.6375. Lower than expected palm oil production in Malaysia has helped to boost crude palm oil prices 5% in just the past two days. The Brazilian real is trading at 7-week highs and the US dollar has fallen to its lowest levels since March 12. This has made US soybean supplies very attractive to foreign buyers, and even though the Chinese government reportedly told state-run buyers to pause purchases of US farm goods on Monday morning, we have already seen two USDA flash sales of soybeans to China this week. July soybeans were unable to close above the 50-day moving average levels yesterday, but prices have traded above this resistance for most of the session so far today. A close above the 50-day would be the first for the July contract since January 17, and new crop November beans made their first close above the 50-day yesterday since January 17. Funds were thought to have bought about 10,000 contracts of soybeans yesterday.

WHEAT

Wheat futures are finding a nice bounce so far this morning, with July CHI wheat up 0.06 to 5.14, July KC wheat is up 0.0825 to 4.59 and July MPLS wheat is up 0.02 to 5.185. Developing drought conditions in the Plains region are supportive, and current forecasts aren’t showing much relief over the next two weeks. The hot and dry weather will likely speed up maturity and harvest, which may have helped to pressure yesterday, even though crop conditions came down. The US dollar is providing solid support against the rallying Russian ruble, and Russian export quotas caused a sharp pullback in April exports. CHI and KC wheat contracts have made a nice bounce above the 10 and 20-day moving average levels after disappointing closes below those levels yesterday. Spring wheat futures have fallen back off the session highs but are still holding nearby support levels that were broken yesterday. Funds were thought to have sold about 5,000 contracts of CHI wheat yesterday.

CATTLE

Cattle markets are moderately higher today, trying to stabilize after some disappointing weakness so far this week. June live cattle are 0.07 higher to 95.37, August lives are up 1.02 and 97.22 and October lives are up 0.45 to 99.87. August feeders are up 0.40 to 133.80 and September are 0.52 to 135.42. The extreme sell-off in boxed beef values has cut deep into packer margins, and though cash markets have been strong lately, this could come to an end quickly if beef cannot stabilize. Increasing slaughter and heavy weights are adding to beef supplies, and though beef demand is rebounding, restaurant demand may not be returning quite as quickly as initially expected, and boxed prices are still very expensive. The cash cattle market with drive price direction for the near term, with the June contract in delivery month.
Live cattle contracts are trading just off the highs of the session so far after early pressure, while the feeder markets are still caught between technical support and resistance areas. The trend seems to be sideways to lower for the lives, and sideways to higher for the feeders.

HOGS

Hog prices look weak today, with lower cash markets leading the way lower. June hogs are down 2.42 to 49.97, July hogs are down 1.00 to 53.87 and August hogs are down 0.82 to 54.72. Pork values are selling off very fast which has many concerned that supplies, and increasing production, are just too high for current demand to handle. Conversely, others are anticipating increasing demand for pork, along with a continued increase in daily kill, to keep prices supported over the longer term. Trade relations with China are another major point of contention and remain nearly impossible to predict. June futures are trading below their Bollinger Band range, and the trend looks lower as long as cash is declining. July and August futures are trading in very quiet ranges today, well within yesterday’s trading ranges. Momentum is pointing sideways to lower despite oversold, or nearly oversold, stochastics.

Author

Sam Seid