10:30 a.m. Market Snapshot | July 23, 2021

Corn futures are 9 to 10 cents lower at midsession, with December potentially on track to end lower on the week.

Futures are under pressure from end-of-week profit-taking and forecasts for rain in parts of the Midwest next week.
The weather outlook remains a mixed bag for Midwest crops: sufficient rains and soil moisture are likely for the Eastern Corn Belt, contrasting with ongoing dryness in the northwest.
“Warmer temperatures and infrequent rain during the next 10 days to two weeks will lead to significant drying in much of the Midwest and stress to crops will increase from the eastern Dakotas and northeastern Nebraska into Minnesota and northern Iowa where yield potentials should decline.
December futures fell as low as $5.49 1/2 early in today’s session, compared to last week’s close of $5.52.
Still, technical signals are neutral to bullish, suggesting sideways to higher trade over the near-term. A close above the July 6 gap crossing at $5.73 1/2 could lead to a test of the July high at $6.11 1/4. A close below the 10-day moving average around $5.50 1/2 would temper the near-term friendly outlook.

Soy complex futures are mixed, with soybeans and soymeal lower and soyoil higher.

Bullish effects from ongoing dryness in key Midwest crop areas is being muted by eroding technical patterns and sluggish exports recently.
As a ridge builds in the western U.S., “heat and dryness will be most significant in the Plains and western Corn Belt during the first week of the outlook, but… rainfall will continue below average in the Plains and western Corn Belt even when the ridge moves to the west and the northwesterly flow pattern evolves in early August.”
Most other parts of the Midwest have enough subsoil moisture to support the needs of crops through the next two weeks, with temperatures not likely hot enough through the next week to cause serious crop stress in most areas, World Weather added.
November soybeans fell as low as $13.48 overnight and, barring a sharp rally today, will post its second lower weekly close in the past three weeks (November ended last week at $13.91 3/4).
Technical indicators have turned neutral to bearish, signaling sideways to lower prices are likely in coming days. A close below the 20-day moving average around $13.54 would confirm a short-term top. Upside targets include this week’s high at $14.18 and the July high at $14.23.

Dryness in the Northern Plains and other top global wheat-producing regions remains supportive to prices.
In the Northern Plains, crop stress “will continue through the next two weeks, especially in the west where the most absolute dryness and greatest heat is expected. Showers and thunderstorms will occur periodically, but it will be very difficult to get enough rain to fall to counter evaporative moisture losses for the entire two-week period.”
Argentina’s 2021-20 wheat crop is deteriorating due to dryness in northern and central areas of the country’s farm belt, the Buenos Aires Grain Exchange said yesterday, but conditions were optimal for southern areas.
France’s farm ministry rated 75% of the country’s soft wheat crop good or excellent as of July 19, a one-point slip from the week prior but still ahead 57% a year earlier. Heavy, late-season rains have eroded yields and crop quality, with some concerned about the crop’s suitability for milling.
Technical indicators, including stochastics and the RSI, reflect overbought conditions in wheat futures, but remain neutral to bullish. That signals sideways to higher prices are possible near-term.
If September extends its recent rally, the 75% retracement level of the May-July decline crossing at $7.28 1/4 would be the next upside target.

Live cattle futures are slightly higher at midsession. Feeder cattle are leading with moderate to sharp gains.

Live cattle are finding some support from signs of stabilization in wholesale beef prices and tighter supplies, while weaker corn trade is lifting feeder cattle futures.
Choice cutout values yesterday rose 90 cents to $266.14, but are still near 3 1/2-month lows and down 22% from an early-June peak at $340.55.
USDA’s monthly Cold Storage Report yesterday showed a solid month-to-month drawdown in frozen beef stocks during June, a period where stocks typically hold about steady. That points to strong beef demand at home and abroad.
USDA’s monthly Cattle on Feed and biannual Cattle Inventory Reports later today are expected to show contraction in feedlots and the U.S. cattle herd.
The July 1 feedlot inventory is expected to be down about 1% from year-earlier levels, and feedlot placements in June are expected to have declined about 4.1% from the same month in 2020, based on average analyst estimates.
On cash markets, live steers in top U.S. feedlot regions yesterday averaged $120.21, down from last week’s average of $122.82, according to USDA.

Lean hog futures are slightly to moderately higher, led by October contracts.

Hog futures buyers have been encouraged by recent strength in wholesale pork markets and strengthening market technicals.
August lean hog futures remain at a discount to the CME lean hog index, which dropped slightly to $112.25 for the two days ended July 21.
Pork cutout values yesterday rose 22 cents to $122.31, the highest since June 17, according to USDA data. However, movement was relatively light amid a seasonal slowdown in processing.
This week’s slaughter, 1.869 million head through Thursday, is up 1.5% from the same period last week but down 0.8% from year-ago.
Cash hog bids dropped $1.47 yesterday to $105.31, based on the national direct average. The latest average is down from $107.32 at the end of last week.
In USDA’s monthly Cold Storage report yesterday, nationwide pork stockpiles fell 20.3 million lbs. during June, smaller the usual drawdown of about 27.6 million lbs. for the month. But overall supplies, 442.15 million lbs., are 3.9% below year-ago levels.
August lean hogs are holding in a tight range after yesterday reaching $107.125, a one-month high, and are on track to finish higher than last week’s close, $105.65.

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