10:30 a.m. Market Snapshot | July 6, 2021

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Corn futures are sharply lower and down the 40-cent daily limit at midsession.

  • Corn futures gapped lower at today’s open and fell the initial 40-cent limit amid a favorable weather outlook for Midwest growing areas approaching the critical pollination phase.
  • Rain is expected at one time or another over the next 10 days in nearly all Midwestern crop areas, which suggests subsoil moisture will be sufficient to carry much of the corn crop through pollination, World Weather Inc. said in a report today.
  • Consultant Dr. Michael Cordonnier lowered his U.S. corn yield estimate by 2 bu. to 175.5 bu. per acre, citing “ongoing problems in the northwestern Corn Belt,” including South Dakota, North Dakota, Minnesota and northwestern Iowa, and said he retained a “lower bias” toward yields.
  • Traders will look for signs of improvement in USDA’s weekly crop condition ratings later today. In last week’s report, USDA reported 64% of the U.S. corn crop was rated “good” to “excellent.”
  • December corn futures dropped as low as $5.39 3/4 and left a gap on the daily chart between Friday’s low of $5.73 1/2 and today’s high of $5.52 1/4. Chart levels to watch include the 100-day moving average around $5.25 and last week’s low of $5.17 1/2.

Soybean futures are down sharply (70-plus cents) at midsession, with November down about 5%.

  • Soybean futures also gapped lower at today’s open amid expectations rainfall forecasts for much of the Midwest in early July will aid crop development.
  • Weather in the heart of the U.S. Midwest will be “very good, with sufficient moisture to carry on normal crop development without rain for two weeks,” World Weather said today.
  • Still, the longer-term weather outlook holds risks for the soybean crop. “Soybeans may have the greatest risk of production shortages if August and early September are hot and dry,” World Weather said.
  • Cordonnier also lowered his U.S. soybean yield projection by 0.8 bu., dropping it to 50 bu. per acre and citing dry soils in the northwest Corn Belt. While that region may receive rain this week, “it does not appear to be enough to overcome the current moisture deficits,” he said.
  • USDA’s crop condition update today may show some soybean acreage benefitted from recent rains. Sixty percent of soybean acreage was rated “good” or “excellent” as of June 27, unchanged from the previous week but below the 71% registered a year earlier.
  • November soybeans fell as low as $13.22 3/4 and left a gap on the daily chart between Friday’s low of $13.82 1/2 and today’s high of $13.73 1/4. Chart levels to watch include the 100-day moving average around $13.06 and the June low of $12.40 1/2.

Winter wheat futures are 31 to 35 cents lower at midsession, with spring wheat tumbling 40 to 50 cents.

  • Wheat is taking spillover pressure from steep declines in corn and soybean markets and the accelerating winter wheat harvest. Spring wheat is also down after some growing regions received recent rains.
  • Weather appears to pose few impediments to the winter wheat harvest. “Conditions will be mostly favorable” over the coming week, World Weather reports. “There will be some shower and thunderstorm activity with locally heavy rain; however, it is unlikely in most unharvested fields that enough rain will fall to raise concern over wheat quality.” Traders await USDA’s next crop progress report today for updates on winter wheat harvest.
  • Traders will also watch today’s USDA update for any further deterioration in spring wheat. Last week, USDA reported 20% of the spring wheat crop as “good” to “excellent” as of June 27. As of June 29, 93% of U.S. spring wheat areas were in drought conditions, USDA reported separately.
  • But the U.S. Northern Plains and Canadian Prairies are in line for showers.

Cattle futures are mixed at midsession, with live cattle moderately lower and feeder cattle moderately to sharply higher.

  • Live cattle are under mild pressure, but still within the recent trading range, after cash cattle and wholesale markets ended last week with a slightly softer tone. Feeder cattle have gained a lift from a selloff in corn.
  • On Friday, live steers averaged $123.82 in five top U.S. cattle markets, down from $125.54 at the end of the previous week.
  • Choice cutout values averaged $285.44, down 6.3% from $304.56 at the end of last week and the lowest since late April. Traders today will look to USDA’s boxed beef market update for an update on July 4 clearance.
  • Average cattle weights stood at 1,351 lbs. the week ended July 3, which was 4 lbs. lower for the week and 15 lbs. lighter than year-ago. That signals marketings have improved and dryness and heat are taking a toll on animals.

Hog futures are mixed at midsession, with July and August contracts slightly to moderately firmer and deferred months under moderate pressure.

  • Futures appear to be in consolidation mode following the steep declines in late June significantly weakened the market’s technical posture.
  • Wholesale pork markets bounced back last week, but price upside in futures will be limited by softer cash prices and expectations for greater supplies.
  • Pork cutout values Friday averaged $115.19, up 4.7% from $110.04 at the end of last week. Last week’s slaughter totaled 2.82 million head, down from 2.36 million head the previous week.
  • Carcasses on daily direct markets Friday averaged $108.21, down 7.4% from $116.89 at the end of last week, according to USDA.
  • Also of note, USDA’s weekly red meat production update showed average hog weights are coming down, though they remain above year-ago levels. Last week’s slaughter totaled 2.82 million head, down from 2.36 million the previous week.
 

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