Corn Finally Finds Footing — Four Straight Days of Gains. Is the Low In?

The USDA reported an export flash sale this morning of 13.7 million bushels of soybeans sold to unknown destinations.

Last week’s ethanol production of 1.102 million barrels/day was down .5% from the week prior and down .6% from a year ago. Corn used in last week’s ethanol production was 109.75 million bushels, well above the 100.71 mb needed to keep pace with the USDA’s marketing year forecast for 5.575 billion bushels.

Grain and Oilseeds Wrap Up

Wheat

Winter wheat prices rallied 16 to 17 cents as wet forecasts are showing up at the wrong time. Production concerns are already in place for wheat and now excessive moisture has a chance to reignite some strength. The December Chicago contract has room to push into the $6.50 to $6.60 range and that would be a level to get defensive again. December Kansas City wheat has room to rally into the $6.80 to $6.90 range.

Corn

The corn market had recently seen bouts of strength but had been failing to maintain gains. Corn prices maintained early strength for once with strength spilling over from double-digit gains in the wheat markets. The December contract is within a penny or two of a major hurdle that sits at $4.50, with a breakout beyond there opening the door to the $4.60 to $4.70 zone. Wet forecasts in June typically don’t help corn rally so expect a choppy market environment to remain the theme.
Soybeans

The soybean market was posting double-digit gains late in the overnight session but quickly backed down when the daytime session was underway. Prices held in positive territory, but confirmation of a likely Chinese purchase wasn’t enough to keep buyers active. Watch for a chance to turn defensive again if the November contract moves into the $11.60 to $11.65 area.

Cattle

August live cattle traded a relatively quiet session following yesterday’s $5.00 surge that brought prices close to highs set in late April and early May around $250. August feeder cattle had to fight their way back from losses of nearly $3.00 and managed to end with small gains. August feeders have room to extend recent gains into the $370 to $380 zone while the challenge of past highs in August live cattle should have hedgers looking at opportunities to get defensive.

Ahead of tomorrow’s monthly Cattle on Feed Report, the average trade estimate for on-feed supply is at 102.5%, placements during May are expected at 94.5% and marketings during May are estimated at 89.4%.

Hogs

The hog market gained some upside traction today, sending the August contract close to highs set over the past week near $97.00. Cutout values have been slipping towards $95 so maintaining a rally remains an uphill battle for hogs while fresh positive news is lacking. Seasonals point to higher prices over the next month or two, and that has us looking at call option spreads to participate in a recovery bounce. If the August hog contract can clear first resistance within the $97 to $98 area, there’s room to continue a run into the low-$100’s.

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