10:30 a.m. Market Snapshot | May 27, 2021

Corn futures rose sharply at midsession, with July contracts up about 34 cents and December is 24 cents higher. Both contracts have pared most of this week’s decline.

• Corn led a sharp rally across the grain and soy complex, driven in part by strong export demand.
• July corn faces resistance at this week’s high at $6.61 3/4 and now strong support at yesterday’s low at $6.02 3/4. July touched a session high at $6.60 1/4.
• Before the open, the USDA reported net corn sales for the week ended May 20 of 555,900 MT for the 2020-21 marketing year, double the level from last week. But the surprise was China bought 168,000 MT, including 66,000 MT switch from prior sales to unknown destinations. That buying may help to ease fears that China is cancelling or rolling sales.
• For 2021-22, net sales of 5.69 MMT were almost entirely the result of China purchases. China also imported 847,000 MT corn last week.
• Other USDA reports underscored the over firm foreign demand outlook. In the USDA’s quarterly agricultural trade forecast, released Wednesday, fiscal year 2021 U.S. farm exports were projected at a record $164 billion, a 21% increase from last year.
• Export demand and technical recovery from steep recent losses overshadowed bearish weather and a favorable start to the growing season. The U.S. corn crop has been planted at the fastest pace since 2012 and recent rains have provided a boost for early development.
• Most of the Midwest will get one inch to as much as 3 inches of rain the next seven days. The key now looks to be where the high-pressure ridge sets up this summer and that may depend on the trend in Pacific Ocean temperatures the next 45 days. Recent cooling argues for the risks for warmer, drier summer weather.  

Soybean futures are higher at midsession, rebounding from overnight weakness, with prices up 20 to 27 cents at midsession. Soymeal futures are also rebounding from earlier losses, posting gains of $5.00 to $6.40. Soyoil futures are sharply higher after a weaker start last night.

• July soybeans are holding gains near session highs but still below last week’s settlement. A higher weekly close tomorrow to end the month would be a positive sign. But the key is how the markets trades next week when June trading begins.  
• The market is caught between the good start for the Midwest crop against the severe tightness should anything go wrong with yields this summer.
• Given the pace of planting and the early conditions, a yield below trend is not a valid argument. In addition, market bears are looking for higher acres than the March intentions when USDA updates at the end of June. 
• There will be support on weakness as we still need to hold a risk premium, but rallies will be capped until new crop conditions are threatened.
• Weekly export sales data for soybeans were generally in line with trade estimates. Old-crop soybean sales were light at 55,900 MT. New-crop sales were just 248,300 MT, at the low end of traders estimates for 225,000 to 600,000 MT.
• Some traders will be disappointed there were no new-crop sales to China. It will be important to see Chinese buying for October-January delivery to put a stronger floor under prices.  

Spring and winter wheat futures are rebounding from multiweek lows ahead of the Memorial Day holiday weekend. Futures are 19 to 23 cents higher at midsession.  

• The market is supported by the lowest initial USDA spring wheat condition rating since 1988, and rain and snow in the area may be too light to provide much improvement this week.
• Canada also will need follow-up rains amid ongoing drought conditions.
• Weekly export sales data for wheat were generally in line with trade estimates.  Old-crop wheat sales were a light 29,500 MT as the marketing year comes to a close. New crop sales were on the lighter side of trade estimates at 373,800 MT.
• There are some signs the price break is attracting overseas buyers. Egypt bought Romanian wheat earlier this week and Saudi Arabia announced a tender for 800,000 MT overnight.    
• The European Commission on Thursday increased its forecast of the usable production of common wheat in the European Union's 27 member countries to 126.2 MMT from 124.8 MMT estimated last month. That’s up 7.7% from a year ago.
• The Commission kept unchanged its outlook for EU exports of common wheat, or soft wheat at 30 MMT, compared with an expected 27 MMT in the season that ends in June.

Live cattle futures are mixed but down from early session highs. Feeders are retreating on renewed strength in the corn market.

• Cattle futures faced pressure at midsession on worries about an impending top in the wholesale beef markets after the surge in prices the past several months.
• Choice cutouts fell 43 cents and Select slipped 21 cents on Wednesday, but sales were moderately active.
• Cash cattle trade Tuesday ranged from $118 to $123, with additional trade ranging from $119 to $120 on Wednesday, with around a 1,000 head trading in Texas at $116. Trade was moderate the past two days and generally steady to higher compared with trade last week.
• Weekly beef export sales rose 19% to 27,900 MT from a week earlier, and up 45% from the prior four-week average. China was the top buyer in the week ended May 20.
• U.S. Trade Representative Katherine Tai said on Wednesday that the United States still faces “very large challenges” in its trade and economic relationship with China that require the Biden administration’s attention across the board.

Hog futures were mostly at midsession, with futures down 20 cents to 90 cents. 

• Hog futures were under mild pressure amid cash market weakness and technical pullback from a rally to contract highs earlier this week.
• July hogs have support around this week’s low of $114.90 and resistance at the contract high of $117.975.
• Strong export demand underpinned prices. Before the open, the USDA reported net sales of 45,900 metric tons of pork for the week ended May 20, up 56% from the prior four-week average. Pork exports of 47,800 MT were up 38% from the previous week and 11% from the prior 4-week average.
• Cash hog markets have eroded this week and slaughter rates have been unimpressive. The weighted average for national direct hogs was $104.91, down $2.51, the USDA reported yesterday.
• Strong pork demand is pushing slaughter higher. Tuesday’s kill was estimated at 485,000 head, a improvement from 466,000 head slaughtered last Tuesday.