GRAIN CALLS
Corn: 1 cent lower to 2 cents higher.
Soybeans: 1 to 3 cents lower.
Wheat: 1 cent lower to 1 cent higher.
GENERAL COMMENTS: Soybeans tried to work higher on corrective buying overnight, but succumbed to continued pressure on soyoil late in the session. Corn and wheat showed little price movement in choppy trade. Overall, price action in grains was quiet, especially considering volatile trade earlier this week. Outside markets are also relatively quiet, with the dollar modestly weaker and crude oil futures mildly firmer.
Soyoil traders remain unnerved by speculation EPA’s proposal it sent to the White House Office of Management and Budget on Thursday was far lower than industry requests. That is triggering active selling in soyoil futures, which have expanded trading limits of 450 points after yesterday’s limit-down performance.
China issued a warning about a high risk of dry, hot winds from next Monday to Thursday that could damage winter wheat crops in major growing regions, according to the China Meteorological Administration (CMA). Temperatures in parts of Henan – the country’s largest wheat-producing province – as well as Shaanxi, Shanxi and others, are expected to exceed 40 degree Celsius (104 F), potentially breaking historical records for this time of year. The extreme heat and dry winds could disrupt the grain filling process and cause the wheat to mature too quickly, CMA warned.
World Weather Inc. said most U.S. crop areas will get rain at one time or another, although West and South Texas, the Texas Coastal Bend and other crop areas near the Gulf of Mexico coast to southern Georgia and Florida will be dry for at least the next 10 days. Restricted rainfall is also expected in the southwestern U.S. HRW wheat region and in the interior valleys of the Pacific Northwest. Too much rain is possible in the lower Midwest, a part of the northern Delta and portions of the Tennessee River Basin next week, resulting in more field working delays.
CORN: July corn futures have rebounded from the lowest level since last October earlier this week and could post a weekly gain with a positive outcome today. Near-term resistance extends from old support at $4.50 1/2 to $4.55. Near-term support extends from the 5-day moving average at $4.46 3/4 to this week’s low at $4.36 1/2.
SOYBEANS: July soybean futures have been extremely volatile this week, reaching the highest level since Feb. 11 on Wednesday before yesterday’s sharp pullback returned prices to last Friday’s close. Near-term support extends from yesterday’s low at $10.46 to last week’s low at $10.36 1/2. The 40-, 50-, 100- and 200-day moving averages are all within that range. Near-term resistance lies in a band from $10.53 3/4 to $10.65, where the 5-, 10- and 20-day moving averages stand.
WHEAT: July SRW futures are on the verge of posting the first weekly gain in five weeks after marking a contract low on Tuesday. While bears remain in firm control of the market, trade this week suggests prices fell too far. To extend the price rally, futures must push above the 20-day moving average at $5.33 1/2, which could trigger a rebound to the $5.40 to $5.50 area. Near-term support is at the 10- and 5-day moving averages at $5.27 1/4 and $5.24, respectively.
LIVESTOCK CALLS
CATTLE: Lower.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open under pressure after sharp losses and low-range closes on Thursday. Price action the past two days signals at least a short-term top, though no major chart damage has been done and the market remains well supported fundamentally. Key to close out the week will be whether buyers show up on the sharp price pullback, as they’ve consistently done on this historic price rally, or more corrective selling produces a weekly key reversal. Despite the sharp selling in futures, cash cattle have traded steady/firmer this week, with prices as high as $229.00 reported in the northern market. Wholesale beef prices also remain strong, with Choice firming 54 cents to $349.90 and Select up $3.33 to $339.18 on Thursday.
HOGS: Lean hog futures are expected to open higher on followthrough buying after strong closes on Thursday. June lean hog futures rebounded from early weakness to finish high-range and post a bullish reversal. That could fuel a test of the late-April high of $101.975, as cash fundamentals are firming seasonally. The CME lean hog index is up 24 cents to $91.02 as of May 14, marking a for-the-move high in the climb to what will likely be a summertime high. Pork cutout firmed $2.58 to $99.92 on Thursday, led by a $7.66 jump in primal bellies, moving to the top of the extended sideways range. However, there’s risk of some profit-taking ahead of the weekend June hogs contract extended their premium to the cash index to $9.68 on Thursday’s close.