GRAIN CALLS
Corn: 3 to 6 cents higher.
Soybeans: Steady to 3 cents lower.
Wheat: SRW 4 to 8 cents higher; HRW and HRS 8 to 12 cents higher.
GENERAL COMMENTS: Soybean futures mildly pulled back from Monday’s strong gains during overnight trade, while the corn and wheat markets finished higher after facing pressure earlier in the session. Outside markets are sending mixed signals to grains as front-month crude oil futures are around $1.00 higher and the U.S. dollar index is more than 400 points higher.
Corn and soybean planting remained ahead of average at 81% and 66% completed, respectively. Of the top 12 corn production states, only Kansas (71% planted vs. average of 75%) and North Dakota (32% vs. 50%) were behind the five-year average planting pace. Of the top 13 soybean production states, planting only lagged the average pace in Minnesota (53% vs. 57%) and North Dakota (20% vs. 33%). Crop emergence is also ahead of the average pace for the second week of May.
World Weather says the Midwest will experience net drying over the next 10 days. Frequent rains will fall across the Central and Southern Plains into next week. Areas of the Northern Plains could also experience active rainfall.
The U.S. has recently purchased five cargoes of wheat from Poland and two from Germany – all around 30,000 MT – for shipment between May and August, Reuters reported, citing European trade sources. The purchases reportedly consisted of milling wheat with 12.5% to 13% protein.
Crop Consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate 1 MMT to 22 MMT, noting yields are poor and acreage abandonment is estimated at around 2 million hectares. He kept his Argentine corn crop estimate at 35 MMT, saying corn has withstood the adverse weather better than soybeans. Cordonnier maintained his Brazilian crop estimates at 155 MMT for soybeans and 125 MMT for corn.
CORN: July corn futures pivoted around Monday’s closing level overnight. Near-term resistance is clustered in the $5.75 to $5.82 range. The 5-day moving average at $5.62 3/4 is near-term support.
SOYBEANS: July soybean futures pulled back from Monday’s gains overnight but held well within yesterday’s boundaries. Near-term support is in the $13.30 to $13.00 range. Near-term resistance extends from the psychological $13.50 level to the 10-day moving average around $13.61 1/2.
WHEAT: July HRW wheat futures are pivoting around last week’s low and the 20-day moving average as the contract pauses following last week’s sharp losses. Monday’s low at $8.07 1/4 will serve as initial support, followed by the psychological $8.00 level. Near-term resistance is clustered in the $8.33 to $8.37 area.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mixed tone. Traders reacted negatively yesterday to news of the atypical BSE case announced by USDA late Friday, as expected, even though it shouldn’t have trade impacts. But futures worked off their lows by the close and shouldn’t face active followthrough selling this morning given their discounts to the cash market. Last week’s average cash cattle price of $175.15 rose $1.02 from the previous week. Next week is a shortened slaughter schedule due to Memorial Day, so packers won’t need as many cattle. Plus, they’ll have a fresh supply of contract cattle available with the flip of the calendar to June next week. As a result, packers will try to get cash cattle bought at lower prices. But feedlots aren’t likely to be willing sellers at lower prices. An extended cash standoff is likely. Choice boxed beef prices jumped $2.80 on Monday, while Select fell 51 cents. Movement totaled only 95 loads.
HOGS: Lean hog futures are expected to open with a mostly lower tone on followthrough selling from Monday’s losses and low-range closes. We feel like the downside is overdone as the cash index continues to rise and the premium in June hogs is now less than average. The CME lean hog index is up another 44 cents to $79.57 (as of May 19). After Monday’s losses, the premium in June hog futures was down to $2.255 to today’s cash quote, more than $1.00 below the 10-year average rise from now until June 16 when the contract will be cash-settled. But trying to call a bottom in this market is a fool’s game.