10:30 a.m. Market Snapshot | July 20, 2021

Corn futures are 16 to 19 cents higher at midsession, with the December contract reaching the highest level in nearly three weeks.

Futures climbed following slightly disappointing USDA crop ratings and ongoing concern persistent dryness in the north and northwest Corn Belt will crimp yields.
USDA yesterday reported 65% of the U.S. corn crop in “good” or “excellent” condition as of Sunday, unchanged from the previous week. Analysts expected a good-to-excellent reading of 66%.
When USDA's weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 1.7 points to 368.5 points, but is still 4 points below the five-year average for the third week of July.
Consultant Michael Cordonnier kept his U.S. corn crop yield estimate unchanged at an average of 175.5 bu. per acre, but noted that late-July weather “will probably not be as good as during the first half of the month and the critical area to watch remains the northwestern Corn Belt.”
Cordonnier maintained his Brazilian corn crop estimate of 88 MMT, but his bias is neutral to lower and he said he suspects the final estimate “will be lower than the current estimate.”
December corn rose as high as $5.69 3/4, the highest intraday price since $5.97 1/2 on July 2; December is close to filling a 21 1/4-cent gap on the daily chart from a post-July 4 selloff; a close above $5.73 1/2, the top of the gap, may portend a test of this month’s high at $6.11 1/4.

Soybean futures are 18 to 26 cents higher, while soymeal and soyoil futures are also higher.

Dry conditions in key U.S. growing areas continue to support the soy complex, with recent USDA crop ratings showing little improvement despite abundant rain in much of the Midwest earlier this month.
USDA rated 60% of the U.S. soybean crop good-to-excellent as of Sunday, up from 59% the previous week and consistent with analysts’ expectations.
Based on the weighted Pro Farmer CCI, the soybean crop improved 0.4 point to 352.3 points, but is still 7.3 points below the five-year average for soybeans in the third week in July.
Cordonnier kept his U.S. soybean yield projection unchanged at 50 bu. per acre, with a neutral bias.
The soybean crop is “slightly underperforming compared to the corn,” Cordonnier said in a report. “Part of the problem is localized, saturated conditions in parts of the southern and eastern Corn Belt. Forecasts for hotter, drier weather are “of particular concern in the northwestern Corn Belt, where the soybeans are already in trouble,” he added.
November soybeans rose as high as $14.06 1/4, after yesterday reaching $14.18, the highest intraday price since $14.23 on July 1. Market bulls’ upside targets include $14.23 and $14.80, the contract high. Support levels include the 40-day moving average around $13.64.

Spring wheat crop conditions continue to deteriorate amid persistent dryness, while new-supply pressure eases on HRW and SRW classes as the winter harvest winds down.
USDA reported 11% of the U.S. spring wheat crop in good-to-excellent condition as of Sunday, down from 16% the previous week. USDA rated 63% of the crop “poor” or “very poor,” up from 55% a week earlier.
The spring wheat CCI plunged another 20.9 points over the past week, paced by a 11.5-point dive in North Dakota. The spring wheat CCI rating is now 38.1% below the five-year average for this date.
Winter wheat harvest advanced 14 percentage points over the past week to 73% complete, one percentage point below the five-year average and in-line with year-ago, according to USDA. Kansas producers have collected 96% of their crop, in-line with the average.
Overnight, September SRW wheat reached $7.18, the highest intraday price since $7.23 1/2 on May 14; September spring wheat rose as high as $9.43 1/2, a cent under the contract high reached yesterday.

Live cattle are mixed and feeder cattle futures are moderately lower at midsession, led by August feeders.

Cattle futures are favoring the downside amid softer technical and slumping wholesale beef prices, which dropped to 3 1/2-month lows; feeders face pressure from the corn market’s renewed rally.
Choice cutout values yesterday averaged $266.49, down $1.45 from Friday and the lowest price since April 7, USDA reports showed.
Cash cattle markets averaged $122.82 last week, up slightly from the week prior and well above an average of $96.36 during the same week in 2020.
Chart levels to watch include August live cattle’s low yesterday at $119.20, the 100-day moving average around $119.90 and the intraday low so far this month at $118.90. Upside levels to watch include $122.60, last week’s high.
USDA reports later this week will help set longer-term direction for cattle markets; upcoming reports include monthly Cold Storage on Thursday and Cattle on Feed and Cattle Inventory Reports Friday.

Lean hog futures are moderately higher, led by deferred contracts.

Hog futures are buoyed by continued strength in the wholesale pork market and August futures’ discount to the CME cash index, which was $112.26 for the two days ending July 16.
Carcasses on national direct markets yesterday averaged $106.24, down $1.08 from Friday. Cutout values averaged $121.85, up $1.91 from Friday and the highest since June 17.
Chart levels to watch include $106.80, last week’s high in August hogs, and the 100-day moving average around $104.20, as well as last week’s low, $102.10.
Controlling and preventing African swine fever (ASF) in China remains a “complicated” and “severe” task, an ag ministry official said, though the official said China’s overall disease situation is stable.
Despite recent ASF outbreaks, Zeng Yande, head of development and planning under the ministry, said China’s hog herd totaled 439 million pigs at the end of June, representing 99.4% of late 2017, pre-ASF levels. Zeng detailed that China’s sow herd stood at 45.64 million head, up 2% from late 2017 levels.

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