10:30 a.m. Market Snapshot | July 19, 2021

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Corn futures are lower at midsession, having trimmed gains after reaching two-week highs overnight. Most contracts are down 4 cents.

  • A selloff in crude oil futures is spilling over into other commodities, with Nymex crude tumbling over 6%.
  • Concerns over dryness in parts of the Midwest, particularly the northwestern corner, continue to underpin corn futures as the crop reaches its critical pollination phase.
  • The Midwest will experience a warmer and drier weather pattern over the next two weeks, according to World Weather Inc. “Stress to crops will increase and potential yields will decline in the northwest, while subsoil moisture should be high enough to support the needs of crops in most other areas,” the forecaster said in a report today.
  • Traders await USDA’s weekly crop condition update later today. A week ago, USDA raised its “good” to “excellent” rating for the corn crop to 65% from 64%, while the “poor” to “very poor” rating dropped to 8% from 9%. USDA reported 26% of the crop was in the silking stage as of July 11, behind the five-year average of 30%.
  • The U.S. inspected nearly 1.001 MMT of corn for export the week ending July 15, which was in line with last week’s tally and expectations.
  • December corn futures overnight rose as high as $5.67 1/2, the highest intraday price since $5.97 1/2 on July 2; New-crop futures still have a gap on the daily chart between today’s high and the July 2 low, $5.73 1/2.
  • Based on chart patterns, December’s sharp bounce from the July low of $5.23 1/2 suggests prices have established a near-term bottom, though market bulls likely must fill the chart gap to sustain recent strength.

Soybean futures are lower after retreating from overnight gains. The market is down 14 to 20 cents, with old-crop leading losses. Soyoil futures are also lower, while soybean meal futures are mixed.

  • Soyoil futures have led soybeans lower amid pressure from sharp declines in crude oil futures, which tumbled over 6% after OPEC agreed to cease production cuts.
  • August futures led declines in soybeans, as the lead contract fell as low as $14.27 1/4 after climbing to a five-week high at $14.80 overnight.
  • Concerns dry conditions may crimp harvest potential continue to underpin new-crop soybean futures; November soybeans overnight rose as high as $14.18, the highest intraday price since $14.23 on July 1.
  • The northwest Corn Belt largely missed out on rain last week, and dryness may expand this week, World Weather said.
  • “As long as timely rain and seasonable temperatures occur in August production potentials should remain quite high outside of the dry areas in the northwest,” World Weather said in a report today. “But if rain were to falter for another week or two, stress to crops and declines in yields would likely expand from the northwest into a larger part of the western Corn Belt.”
  • USDA’s weekly crop ratings update today will indicate whether rains earlier in July helped stabilize soybean conditions. Last week, USDA rated 59% of the crop “good” to “excellent,” unchanged from the previous week, and 11% “poor” to “very poor.”
  • Soybean export inspections totaled 143,934 MT the week ending July 15, which was in line with expectations.

Wheat futures have pared early gains to trade fractionally to 6 cents higher, with spring wheat climbing near nine-year highs and SRW near two-month highs.

  • Extreme heat and dryness continue to grip the Northern Plains, with little relief in sight for the beleaguered spring wheat crop.
  • Temperatures may reach 108 to 112 degrees Fahrenheit in Montana over the next two weeks, according to World Weather. “Canada’s Prairies and the U.S. Northern Plains will see a new round of declining crop conditions over the next 10 days,” the forecaster said in a report today.
  • September spring wheat overnight surged to $9.44 1/2, the highest price on the continuation chart since November 2012.
  • USDA last week held its spring wheat crop ratings at 16% “good” to “excellent,” though there was a one-point drop from the top category and the portion of crop rated “poor” to “very poor” increased five points to 55%.
  • HRW and SRW futures are higher amid encouraging export demand signs and followthrough from last week’s rally. September SRW rose as high as $7.09 1/2, the highest intraday price since $7.17 1/4 on May 18.
  • The U.S. inspected 490,626 MT of wheat for export the week ending July 15, which was near the upper end of expectations and up from last week, despite rising prices.

Live cattle and feeder cattle futures are lower at midsession, led by declines in deferred contracts.

  • Cattle futures face continue pressure from softer cash markets and poor technical performance last week; October live cattle fell as low as $124.05 today, the lowest price since June 10.
  • Traders await USDA reports this week that will help set longer-term direction; upcoming reports include monthly Cold Storage on Thursday and Cattle on Feed and Cattle Inventory Reports Friday.
  • Wholesale beef remains in retreat, with cutout values falling to a three-month low last week. Choice boxed beef cutout values averaged $267.94, down 3.8% for the week and the lowest price since April 7.
  • Live steers averaged $122.80 in top U.S. feedlot regions at the end of last week, up from an average of $122.16 for the previous week, according to USDA.
  • Chart levels to watch include August live cattle’s 100-day moving average around $119.90 and the intraday low so far this month at $118.90.

Lean hog futures are lower, with the August contract dropping over 1.2%.

  • Hogs are under some profit-taking pressure after last week’s gains, but remain underpinned by cash market strength.
  • August futures remain at a large discount to the CME cash index, which was $111.89 as of July 15.
  • While cash hogs slipped last week, wholesale pork extended a recent climb amid firm demand and snug supplies.
  • Last week’s slaughter, at 2.28 million head, was down 9.4% from the same week a year earlier.
  • Carcasses on national direct markets averaged $107.32 at the end of last week, down 4.1% from $111.86 a week earlier.
  • Cutout values averaged $119.94 at the end of last week, up 2.7% from $116.44 a week earlier.
  • Over the weekend, Germany confirmed a third case of African swine fever on a farm in the eastern state of Brandenburg.
  • Chinese live hog prices may continue to rebound, a government official said. Fewer pigs were born in January and February, which should lead to a drop in the number of hogs slaughtered in July and August.
  • Chart levels to watch include $106.80, last week’s high in August hogs, and the 100-day moving average around $104.17.
 

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