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Closing Comments

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Closing Comments

Corn

Corn futures slip to nearly seven-month lows on favorable planting weather and ample supplies.

Exporters shipped 41.4 million bushels of corn in the week ending April 30, down from a strong 53.6 million the previous week, but still above the five-year average for the week of 31.5 million bushels. The past week’s total included just 0.1 million bushels destined for China.

Marketing year shipments to all destinations total 1.089 billion bushels, down 63 million or 5% from the previous year. Exporters typically ship 64% of final corn shipments by this point in the year, whereas they had shipped 60% by this point last year. The 60% pace matches the portion of USDA’s target for the current year that has been shipped thus far. As such, shipments to date fall short of the seasonal pace needed to reach USDA’s target by August 31 by 51 million bushels, but that is down from a deficit of 63 million bushels the previous week.

Exporters shipped 10.8 million bushels of grain sorghum in the week ending April 30, up from 6.3 million the previous week and above the five-year average for the week of 1.8 million bushels. The past week’s total included 8.6 million bushels destined for end users in China.

Marketing year shipments to all destinations total 267 million bushels, up 148 million or 124% from the previous year. Exporters typically ship 67% of final grain sorghum shipments by this point in the year, whereas they had shipped 56% by this point last year. However, this year they have already shipped 76% of USDA’s massively large target. As such, shipments to date exceed the seasonal pace needed to hit USDA’s target by August 31 by 34 million bushels, up from 26 million the previous week.

Corn futures slipped to their lowest level since October 6 today as traders focused on expectations that this afternoon’s USDA crop progress report will show that corn planting has reached the midway point with favorable moisture to get the crop off to a good start. A Reuters’ survey of trade participants showed they expect USDA to report that 49% of the crop was in the ground as of Sunday, while  Water Street submitted an estimate of 52%. Drier western areas are expected to be favored by rains over the next two weeks, while wetter eastern areas dry out a bit to allow planting progress.

Soybeans

Bargain hunters return to buy soybeans after dipping to two-week lows Friday, supported by a surge in soyoil prices.

Exporters shipped 6.3 million bushels of soybeans in the week ending April 30, down from 11.5 million the previous week and down from the five-year average pace for the week of 8.0 million bushels. The past week’s total did not include any soybeans destined for China.

Marketing year shipments to all destinations total 1.689 billion bushels, up 166 million or  11% from the previous year. Exporters typically ship 86% of final soybean shipments by this point in the year, whereas they had shipped 92% by this point last year. However, this year they have already shipped 94% of USDA’s target. As such, shipments to date exceed the seasonal pace needed to reach USDA’s target by August 31 by 154 million bushels, although that is down from 165 million the previous week.

Soyoil prices surged higher today on trade chatter that China was shopping for oil. That in turn provided support for the soybean market. However, most of the interest seemed to be for Argentine soyoil. Soybeans seemed to be looking for an excuse to move higher after falling to two week lows on Friday, but the lead July contract struggled to even take out Friday’s high.

Heavy rains fell in Argentina to slow the harvest over the weekend, but the next two weeks look favorable for drying fields and bringing the last half of the crop in. Yields in portions of Buenos Aires, Santa Fe and Cordoba have been reported to be as high as 6.5 million metric tons per hectare, which would be an impressive 96.7 bushels per acre.

July soybeans tried to rally a number of times today, but could never reach Friday’s high of $9.79. That becomes a more significant area of chart resistance for tomorrow’s session. A Reuters’ survey of trade participants revealed that they expect this afternoon’s crop progress report to show that 11% of the crop was planted as of Sunday, while Water Street submitted an estimate of 14%.

Wheat

Wheat prices slip lower ahead of Central Plains wheat tour that kicks off in the morning.

Exporters shipped 12 million bushels of wheat in the week ending April 30, down from 20.3 million the previous week and down from the five-year average for the week of 22.9 million bushels. Marketing year shipments total 774 million bushels, down 292 million or 27% from the previous year. Shipments to date fall short of the seasonal pace needed to reach USDA’s target by May 31 by 16 million bushels, versus being short of the pace by 10 million bushels the previous week.

Prices slipped modestly lower today, but remained above last week’s low at all three exchanges. Traders are focused on generally favorable growing conditions across most major-producing areas of the world. The biggest problem area currently is the U.S. Central Plains, which will be the focus of an industry tour Tuesday to Thursday of this week. However, the trade currently does not believe that losses in that area are great enough to justify a rally considering poor export demand.

The trade expects this afternoon’s USDA crop progress report to show that 72% of the spring wheat crop was planted as of Sunday, while 43% of the winter wheat crop is rated Good to Excellent. Water Street submitted estimates of 71% for spring wheat and 43% G/E for winter wheat.

Beef

Cattle futures rebound on robust product movement amid higher demand as exemplified by Friday’s cash trade.

Last week’s product movement was among the best for the year thus far as grilling season gains momentum. Product prices fell, but the product moved nonetheless. That combined with profitable margins to stimulate active competition on the negotiated cash market, with prices rising $2 to $3 above the previous week’s levels. That supported strength in the cattle futures today, although there was little panic among traders and the lead June contract continues to trade at double-digit discounts to the cash market.

Today’s kill is estimated at 113,000 head, up 8,000 head from the previous week, but down 5,000 from the previous year.

Last week’s boxed beef movement totaled 991 loads on the spot daily market, up from 831 loads the previous week and a seven-month high, but at lower prices. Choice cuts finished the week at $254.64 per cwt, down $2.35 on the week and down $3.15 over the past two weeks. Select cuts finished the week at $243.22 per cwt, down $4.40 on the week and down $7.75 over the past two weeks. The Choice/Select spread finished the week at $11.42 per cwt, up $2.05 on the week and up $11.37 over the past 7 weeks. Movement at mid-morning today was typically slow for a Monday at 70 loads, but Choice cuts bounced $1.70 per cwt, while Select cuts were up $1.94.

Feeder cattle futures had an upward bias as well. Firmer fat cattle prices provided the initial spark, but cheap corn prices provided support as well. The latest CME 7-day cash index today came in $215.77 per cwt, down $2.23 on the day, but still up $1.42 on the week. The 200-day moving average sits just above the lead May feeder cattle contract at $215.75 per cwt.

June live cattle futures pushed higher on the strength of demand for beef. However, gains were limited by trend line resistance off the April highs on the charts.

Pork

Lean hog futures consolidate higher on cash strength as demand strengthens.

The cash market continues to climb, with today’s Midwest market mostly steady to $1 higher, although portions of Ohio were up to $2 higher. The latest CME 2-day lean hog index was at $69.49 per cwt, up $1.33 on the day, up $4.10 on the week and up $9.91 over the past four weeks that prices have been rising on a daily basis.

Product movement totaled 1,648 loads over the past week, down from 1,669 loads the previous week, but up from 1,612 loads the previous year. The composite pork product price finished the week at $73.86 per cwt, up $3.92 over the past week and up $8.51 over the past five weeks. Friday’s composite price was just shy of a three-month high. Movement at midday today was slow at 140 loads and at lower prices. The composite price slipped to $72.14 per cwt, down $1.72 from Friday.

Today’s kill is estimated at 425,000 head, down 4,000 from the previous week, but up 40,000 from the previous year.

June lean hogs consolidated higher today, just below the 100-day moving average. The indicator, currently at $81.845, has been a cap for the market over the past four session, increasing its significance. The futures market is nearing over-bought territory, trading more than $10 above the cash index. The market may have more upside potential in it based on long-term supply and demand fundamentals, but is vulnerable to a significant correction lower near-term.

Closing Market Snapshot

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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