Grain markets were seen limping into a long weekend while the cattle complex saw another WILD day!

Grains Limp Along — Corn and Soybeans Claim Small Victories Before the Long Weekend

Grain markets were seen limping into a long weekend while the cattle complex saw another WILD day!  Blue Line Futures Co-Founder, Oliver Sloup, breaks down today's price action and where that leaves us into a long weekend.

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The monthly Cattle on Feed Report showed on-feed supply at 11.6 million head as of May 1st, up 2% from a year ago, up slightly from the average trade guess calling for a 1.6% increase. Placements during April were up 6% from last year, well above the average trade guess that called for a 3.4% increase and the first increase in placements in 18 months. Marketings were down 10% from a year ago, which was close to the average trade estimate. Higher than expected placements have a chance to keep bears in control of the cattle markets next week.

The USDA reported export flash sales this morning of 19.4 million bushels of corn sold to Mexico and 4.3 million bushels of corn sold to unknown destinations. The USDA also reported 252,000 tons of soybean meal was sold to unknown destinations.

Grain and Oilseeds Wrap Up

July corn was up 8 cents for the week, July beans were up 20 cents for the week and July Chicago wheat was up 12 cents for the week.

Grain traders who skipped out early today to extend the long weekend didn’t miss much. Corn prices reached nickel gains mid-morning before settling back to cling to small gains into the close. The July contract is approaching the $4.55 to $4.60 zone, an area that has prompted buying interest over the past two months. If the only factor impacting corn prices was weather and planting progress, there wouldn’t be much reason to rally. With inflation running high and the Middle East conflict ongoing, we’ll expect the back and forth swings to continue for a while longer.

July beans rallied to 7 cent gains this morning but a challenge of $12.00 couldn’t be maintained. Prices would settle back and finish with smaller gains. There’s a look of a head and shoulders technical pattern on the July chart after the recent rally to $12.20 failed to see follow through strength. If support is breached at $11.90, look for a quick run down to $11.70.

Kansas City wheat was taking on dime losses late in the day before a recovery effort took shape ahead of the close. Production uncertainty remains in place but the market is struggling to get that back in focus. We see downside risk expanding to the $6.60 area for the July KC contract if short-term support fails to hold at $6.80.

July Chicago wheat overcame nickel losses to finish close to unchanged. The July contract is threatening a move below its 20-day moving average and recent history suggests a break below there would open the door to a challenge of 50-day moving average support that currently sits a few cents below $6.25. Again, production uncertainty needs to be put back in focus or crude oil prices need to surge again, otherwise rally potential diminishes for the wheat markets.

Cattle

June live cattle were down $4.50 for the week while August feeders were down $11.50 for the week.

Feeder cattle were trading with expanded limits following yesterday’s rout, and would reach losses of more than $12.00 today. It’s not often I write that cattle prices reach double-digit losses, but big moves will remain a theme with the market still trading at historically high levels. Prices would rebound in the second half of the session, but damage is being done and margin calls are growing for traders on the long side of the market. The August contract will need a quick rebound back above $358 to signal that the latest plunge was overdone. Fundamentals would suggest that a recovery is still very likely.

June live cattle overcame a midday pullback that took prices to $2.50 losses to end the day near unchanged. We haven’t liked the fact that cattle futures aren’t responding to ongoing strength in the cash market. The June contract needs to hold above the $245 to $249 zone to avoid suffering a similar fate as what feeder cattle just dealt with.

Hogs

July hogs were down about $3.00 for the week.

July hogs tested the waters again below $100.00 today and managed to bounce back prior to the close. Positive news is lacking but seasonal tendencies point to stronger market potential as we head into the summer months. Dips below $100 appear to be an opportunity to take a positive stance in the market.

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