Wkly Futures Mkt Summary June 24.24

SOYBEANS

After making 2 ½ year lows late last week on November futures, prices are bouncing slightly to start the week on flooding concerns in southeast South Dakota, southern Minnesota, and northwest Iowa, where 4-8 inches of rain has fallen in the last 72 hours.

The 6-10 day forecasts have above normal precipitation for most of the Midwest, with temperatures above normal in the southeast bean belt and below normal in the northern Midwest. The 8-14 day outlook is similar, but above-normal temperatures move north to cover the southern half of the soybean belt. Overall, the outlook appears less threatening for the eastern bean belt than Friday’s forecast. Flooding doesn’t typically garner the kind of bullish weather reaction that heat and drought do, and we doubt the market can sustain a rally with the current weather forecasts. However, technical indicators are significantly oversold, and a short-coverage bounce into the USDA report at the end of the week is possible. Look for heavy resistance above 1145 on November futures.

SOYBEAN MEAL

The end of the quarter, end of month, and USDA’s release of the Quarterly Stocks and Acreage report on Friday this week are expected to increase trading volatility.  USDA announced a large sale of 228,000 tonnes of US meal to the Philippines for the 2024/25 crop year Monday morning. The announcement is supporting soymeal prices and is one of the largest meal morning flash sales we have seen in quite some time and confirms US competitiveness off the Pacific Northwest Coast.

The soy complex is not seeing much weather risk premium as price action has been weak, and adverse Midwest crop conditions need to be more widespread to get Managed Money funds to cover their short positions. Commitment of Trader’s data is delayed due to the holiday last week and will be released Monday afternoon. Bean acreage is expected to come in around 86.753 million acres Friday, slightly above the 86.51 in the March intentions report and well above last year’s 83.60.

CORN

December corn continues to slip lower to start the week as the US Midwest forecast looks less threatening than Friday’s outlook. Excessive rains fell in southeast South Dakota, northwest Iowa, and southern Minnesota over the last 72 hours, and there have been many reports of flooding in those areas. The 10-day outlook shows rains a little further into the eastern belt, especially next week, and above-normal temperatures in the 6–10-day forecast are pushed into the southeast corn belt. In the 8- 14-day outlook, warmer temps shift back north to cover the southern half of the corn belt.

Ukraine says they have exported 28.4 million tonnes of corn for the marketing year, which ends this week, compared to USDA’s forecast of 26 million tonnes. The Buenos Aries Grain Exchange says the Argentine corn crop is 49.3% harvested. Last week, weekly export sales were below guesses and in another blow to the bull camp, South Korea bought South American corn rather than US. On Friday of this week, USDA will release the June quarterly stocks and acreage report and it is also end of month and end of quarter, which may add to the volatility late this week.

WHEAT

Last week’s bearish action on wheat continued this morning, and a lower close today would make 17 of the previous 18 trading sessions with a steady/lower close. Technical indicators are extremely oversold, but most recent fundamental news has been bearish.

Good overall yield reports from the US harvest, less threatening Black Sea weather, and weakening Russian prices are all weighing on the market. This afternoon, winter wheat harvest progress may reach 40% complete as hot, dry weather in the southern Plains has been ideal to keep the combines moving. The Russian Ag Minister kept the Russian wheat crop production estimate unchanged at 86 million tonnes, but they said it could be adjusted later. USDA’s latest number was 83 million. Last week, Russia’s Ag Minister said he expects their grain exports to grow by more than 25% by 2030. Showers in southern Russia have reduced the driest area to less than 20% of the crop area, and temperatures have moderated. However, very early yields in the Rostov region came in well below a year ago. An Indian government official says they will maintain limits on how much wheat can be stored by producers and agribusiness companies to limit hoarding through March 2025. He went on to say a reduction or elimination of the wheat import duty could be used if need be but said there is no shortage at this time.

CATTLE

Friday’s Cattle On Feed report showed On Feed at 100% of last year, compared to 99.1% expected and an estimated range of 98.3% to 100.7%. Placements came in at 104%, well above the average estimate of 98.7% and above the top of the range of 95.0% to 102.4%. Marketings came in at 100% a year ago, right on the estimates of 100.2%. Clearly, the much higher-than-expected placement number was the main bearish surprise, although on-feed numbers were also a bit bearish. Improved wheat pasture grazing conditions may be the reason for the larger than expected placements, which are expected to negatively affect the October and December contracts this morning, while the front months will be supported by cash trade Friday that was $5 above the prior week in Nebraska and Iowa and $4 above in Kansas and Texas. Live the sales were mainly $189-$190 in the South and $198–$199 in the North. August futures have significant support at the upside gap a week ago at 180.35. Last week’s 5-day, 5-area weighted average was 195.54, compared to the previous week at 192.03. The USDA estimated cattle slaughter for last week was 620,000 head, up from 615,000 the previous week. The USDA boxed beef cutout was down 52 cents at mid-session Friday and closed 48 cents lower at $322.39, up from $319.89 the previous week. Beef production last week was 525.8 million pounds, up from 522 million the week before and 526 million a year ago.

HOGS

Last week, August hogs lost about $1.00, and Friday’s trading volume was the lowest in a month. Cash markets were flat, and Friday’s Export Sales were the lowest in the last five weeks. The June Hog and Pig report will be out Thursday afternoon and is expected to be bearish. Last week’s significant technical reversal higher still looks like an important technical low at 86.67 on August. The CME Lean Hog Index as of June 19 was 90.55, down from 90.72 the previous session and from 91.58 the previous week. The USDA estimated hog slaughter came in at 474,000 head on Friday and 49,000 on Saturday, bringing total slaughter for last week to 2.390 million head, down from 2.422 million the previous week but up from 2.326 million a year ago. The USDA pork cutout, released after the close Friday, came in at $98.54, up $1.98 from Thursday but down from $100.71 the previous week. Estimated U.S. pork production last week was 521.5 million pounds, up from 515.1 the previous week and up from 497.9 a year ago.

MILK – CLASS III

July Class III Milk ended lower last week but recovered from steep losses seen early in the week. The USDA reported that fluid milk production declined in most regions last week, with high temperatures in the South and West pushing cattle from their comfort zones. Cooler temperatures and better cow comfort are the primary reasons Northeast milk production levels have been higher than anticipated for this time of the year.

The USDA reported that US milk production fell by 0.7% year over year in May. Output for the 24 major-producing states was 18.88b lbs, 131m less than in May last year. Milk per cow averaged 2,122 lbs, a 0.1% decline from last year.

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