CORN

Corn futures were up a penny overnight as fresh selling interest dries up mid-week and position squaring takes place ahead of the expiration of July options on Friday. Managed Money sold 15,000 corn contracts yesterday and is estimated net short 286,000 contracts.  Weekly Ethanol Stats will be out today, exports tomorrow.   Weather is deemed overall favorable for crop development, and this will keep pressure on prices.  Weak technicals are also noted after prices fell to their lowest point since June 1, leaving the market technically oversold and due for some sort of minor recovery.  For the Midwest, rains will finish up in the east today and then things will be mainly dry across the region through Thursday; the next round of rains will arrive in the west early Friday and work into the rest of the region later Friday into early Saturday. The 6 to 10 day forecast still sees moderate rainfall to continue into early next week with good coverage.

SOYBEANS

Soybean futures were unchanged overnight.  A weaker U.S dollar vs the Brazilian real keeps U.S. soybeans the most affordable supply on the global export market.  Brazilian soybean exports are expected to reach 12.6 million tons in June, slightly lower than the 13 million tons predicted last week.  China stepped in to buy 132,000 metric tons of new crop U.S. beans yesterday.  This export activity will be key to keep buying support in the market.  However, the bean market is tilting negative.  Weather is favorable and a bearish force short-term, as are lower values in meal where that market has seen lower trade 7 out of the last 8 days.  Managed Money is estimated net long 29,000 soybeans; net short 53,000 lots of soymeal, and; short 4,000 soyoil.  Chinese Ag futures were lower overnight and Malaysian palm oil prices were down 12 ringgit at 2,454 (basis September) at mid-session awaiting further updated trade data.

WHEAT

Wheat futures were firm overnight as traders decide how to react to bullish hook reversals formed this week aided by a drop in crop conditions for spring wheat.  Futures held support on Tuesday and saw spreads continue to unwind as prices consolidate off the most recent push lower looking for direction as winter wheat harvest pushes north.  The Southern Plains has hit and miss rains through Friday.  The 6 to 10 day has the next round of rains looking to arrive by the weekend.

CATTLE

Live cattle futures are called flat/firm.  Strong closes on Tuesday suggest the major trend could be turning up and possibly attract additional money flow.  Retail values have seemed to stabilize and may be an indication that there is good value to be had, but cash trade is mostly undeveloped for the week and will likely force the direction of the cattle markets.  A few live trades in Texas were reported at $95/cwt, $5 under last week.  The problem with the cash market was clearly illustrated by the recent Cattle on Feed report.  The number of cattle on feed greater than 150 days was 3.28 million head up 971,000 head from last year, 43% higher than a year ago.  Cattle on feed greater than 120 days, was up 23% from last year.

HOGS

Lean hog futures are called steady to firmer.  Nice price recoveries on Tuesday should usher in additional buying interest for the market, particularly with lingering support from a friendly cold storage report.  Choppy, uneven activity can be expected, though as hogs are oversold, and could experience position-squaring ahead of Thursday’s quarterly Hogs and Pigs report.

Author

Matthew Strelow