News Source: SPC
Top Farmer Closing Commentary 5-25-18
CORN HIGHLIGHTS: Corn futures showed strength throughout the day as contracts finished from 1 to 3 cents higher. Front month Jul was up a 1-3/4 cents to 4.06, while new crop Dec finished 2-1/2 cents higher to 4.25. This ended a strong week for corn futures as prices finished 4-3/4 cents higher on the Dec contract, and 3-1/2 cents higher on Jul. In today's close, Dec posted its highest weekly close for the contract life. Despite seeing potential selling pressure from a strongly weaker crude oil market, and a firmer U.S. dollar, overall strength in the grain market provided some carryover support in the corn futures today. News was relatively quiet, as prices were in consolidation mode in today's trade. Weather will stay clearly in focus, as the U.S. is forecasted for warm weather to dominate next week, so the key will be rainfall coverage throughout that region. Second crop Brazil corn is trending back drier in the short-term, which could continue to put pressure on this year's second crop corn. Earlier this week, analysts evaluating that Brazilian corn crop lowered estimates reflecting potential impact from dry conditions. Today, corn prices may be looking for some direction, but with holiday trade, failed to develop much of an overall pattern. Prices are still finishing 5 cents off of yesterday's challenge of the Dec contract highs, which could have prices poised for a bit of a pause. Going forward, it will be about weather and development of this year's crop.
SOYBEAN HIGHLIGHTS: Soybean futures finished 4 to 6 cents higher in today's trade, with the Jul contract up 5-3/4 to 10.41-1/2 and Nov up 6 to 10.53-1/4. Today finished an impressive week for bean markets as the Jul contract finished 43 cents higher and Nov gained 45 cents in weekly trade. In a relatively quiet session, bean futures held moderate gains throughout the entire trading session, being supported by China stepping into the export market, locking in some new crop bean sales. In addition, an ongoing trucker strike in Brazil is likely starting to disrupt the movement of soybeans from fields to ports, as well as supplies back and forth throughout the countryside. Though having a minimal impact at this time on Brazilian exports could develop into a potential problem if the strike maintains a longer term play. Soybean futures found buying support on the Nov contract on the 10.50 level, as prices held support above this key psychological level. Jul futures tested support levels at the 20 and 40-day moving averages, holding this level by the end of today's trade. Going forward, weather will clearly be in focus to determine the start of this year's U.S. bean crop, which has planting pace in line with expectations, but hot forecasts may bring some early weather premium if rain doesn't materialize as forecasted.
WHEAT HIGHLIGHTS: Wheat futures were the strength of the grain market today, as Chi contracts finished with double-digit gains of 10 to 12 cents. Front month Jul finished 12-3/4 cents higher to 5.43, while Sep was up 12-3/4 to 5.59-3/4. Strength was in other wheat markets as Jul KC hard red winter wheat finished 15 cents higher to 5.64, and Mpls spring wheat Jul was up 9-1/2 to 6.44-1/4. Like soybeans, today ended a strong week in the wheat market with Chi Jul up 4-3/4 cents. Wheat futures rallied off of yesterday's late afternoon profit-taking as weather dictated the movement in the market. Forecasts across the southwestern Plains are for extremely warm temperatures which should help boost maturity, adding heat stress to a crop looking to finish out. Rain forecasts are scheduled for the Kansas area, but may be too late to matter as these warm temperatures are forecasted to run into next week. In addition, internationally, weather concerns in the Black Sea Region and Australia may have also helped provide some spillover buying support. The export front will continue to be difficult for wheat futures at these elevated prices, as the Black Sea Region will continue to dominate export trade, versus the more expensive U.S. wheat counterpart.
CATTLE HIGHLIGHTS: Cattle futures put in positive closes today, though just moderately so. Jun live cattle futures closed 25 cents higher to 104.65, Aug closed 52 cents higher to 102.30, and Oct closed 57 cents higher to 105.82. Feeder cattle futures put in closes over 1.00 higher out to Apr next year. Today's Cattle on Feed report came in directly in line with expectations. Placements were pegged at 91%, marketings at 106%, and on feed at 105%. These results were relatively neutral for the market. Beef values were a source of pressure today, with choice cuts closing 1.08 lower yesterday afternoon to 229.00, and down another 1.59 this morning to 227.41. Just a few head were sold in Kansas late yesterday afternoon at $109 to $110, down $1 to $2 from last week. Country activity today has been very quiet with bids seen in the $108 to $110 area. Today's technical price action was not very exciting, though the positive finishes on the week were solid. Jun futures picked up 2.25 this week, Aug gained 4.07 and Oct gained 4.12. Jun futures remain below major moving average resistance at the 20 and 50-day, and Aug below its 20-day moving average.
LEAN HOG HIGHLIGHTS: Hog futures put in mixed closes today, with the Jun futures unable to gain any steam higher, while Jul and Aug broke out of their trading range. Jun futures closed 62 cents lower to 74.20, Jul closed 77 cents higher to 77.55, and Aug closed 72 cents higher to 76.07. The CME Lean Hog Index was up 26 cents to 69.29, and carcass cutout values were essentially steady, keeping the pressure on packer margins. Ribs were up 8.74 today to 135.20. This was supportive, but after a drop yesterday of over 23.00, an 8.00 jump does not seem quite so bullish. Buyers, this week, were active on forecasts for hot temperatures over the 3-day weekend, which could further lower average carcass weights. Jun futures lost 50 cents this week, but were able to limit the losses with Wednesday's and Thursday's gains. Jul closed 30 cents higher on the week, and Aug closed 55 cents lower on the week. This is indicative of a market that is trapped between a more supportive short-term outlook, but a hefty long-term supply outlook.
Top Farmer Midday Update 5-25-18
CORN: Corn futures are trading slightly higher at midday, with Jul up 1-1/4 cents to 4.05-1/2, and Dec up 1-1/2 cents to 4.24. Buyers have kept the corn supported today as they look forward to a hot weekend across the country, and some pockets that are still having trouble with finishing up planting. Moisture is anticipated for many areas this weekend, but the possibility that the heat is not accompanied by rain is a cause for buying.
SOYBEANS: Soybean futures are trading 5 to 6 cents higher at midday, with both Jul and Nov up 5-3/4 cents. Buyers have been active all morning with a hot weekend ahead of us. In addition, markets are closed on Monday, which can add some extra volatility.
WHEAT: Wheat futures are higher at midday, with Jul contracts up 8 to 9, KC up 10 to 11, and spring wheat contracts up 5 to 8. Winter wheat areas will likely be subject to some heat stress this weekend, adding some uncertainty to already vulnerable hard red winter wheat crop. Export sales are lagging behind, but money wants to own what it sees as an at-risk crop.
CATTLE: Cattle futures are trading just slightly higher on the results of today's Cattle on Feed report. Jun futures are 12 cents higher to 104.52, Aug lives are up 35 cents to 102.12. Cattle on Feed data came in right in line with expectations, keeping the trade status quo.
HOGS: Hog futures are still trading choppy this morning, with Jun hogs down 47 cents to 74.35, and Jul hogs up 30 cents to 77.07. Without major fundamental or technical developments to trade today, hog futures are chopping around near major moving average levels. Rallying cash hog prices and pork values are the major supportive factors at this point.
Top Farmer Opening Calls 5-25-18
CORN: Corn futures are up a penny and look to respect this week’s new highs leading to some decent U.S. new crop farmer selling. Monday is Memorial Day, and trade after today will not resume until Monday night. It has been a positive week for prices up to this point largely on money flow by specs and optimism on trade deals with China. Weather has also been a bit of a primer with nooks and crannies both in the U.S. and abroad having some production concerns. So far, there doesn’t appear to be too much of a fallout over the U.S. pulling out of talks with North Korea.
SOYBEANS: Soybean futures are 4 to 5 cents higher in a technical bounce off of yesterday’s slack trade and some bean sales to China. USDA said the leading importer of soybeans bought 312,000 tons of U.S. new crop beans and another 165,000 tons from an unknown destination. Light, pre-holiday trade volume may lead to some choppy movement within yesterday’s 12 cent trading ranges.
WHEAT: Wheat futures are up 6 to 7 cents, underpinned by expectations for diminished winter wheat yields this summer due to drought. And, dry weather in Russia and Australia. Managed money is seen building on their long SRW wheat position. We’ll see if that continues today. Otherwise, prices could see some pre-holiday profit-taking pressure.
CATTLE:Cattle futures are trading slightly lower in the opening minutes today, with Jun live cattle down 50 cents, Aug live cattle down 7 cents, and Oct live cattle steady. All feeder contracts out to Nov are slightly negative as well. The very quiet trade is no surprise today, as position taking has mostly wrapped up in front of this morning's Cattle on Feed report. Expectations for a hot weekend could draw some buying interest later on, but there probably aren't many traders ready to take a stance before herd data is released.
HOGS:Hog futures are trading mixed early this morning, with Jun hogs down 15 cents to 74.67, Jul up 72 cents to 77.50, and Aug up 70 cents to 76.05. The 3-day Memorial Weekend should provide some solid fundamental support with anticipation of heavy pork demand. Jun and Jul futures are making a move past the highs Wednesday, and trying to break towards Monday's open.