10:30 Market Snapshot | June 8, 2021

Corn futures are 5 to 7 cents higher at midsession.

• Worries Corn prices extended a weather rally amid signs extreme heat and dryness in the Midwest is causing crop deterioration.
• USDA’s weekly crop progress report, released after yesterday’s close, had 72% of U.S. corn rated “good” or “excellent” at the start of this week, down from 76% a week earlier and below analysts’ expectations for a reading of about 74%.
• Yesterday was “another hot and stressful day” for crops, World Weather Inc. said today, and recent weather outlooks convey little relief for parched fields across much of the Corn Belt this week.
• Parts of the Eastern Midwest received rain over the past day, with 0.25 to 0.75 inch reported in central Illinois, north-central Indiana and much of Ohio, according to World Weather. Most of Iowa, Nebraska and southern Minnesota received no rain.
• Next week may hold better prospects for rain. A high-pressure ridge over North America is expected to shift westward this weekend, creating a “northwesterly flow pattern” in the Midwest that may bring showers and thunderstorms, though rain coverage will be limited in northern and western areas.
• Upside targets to watch in July futures include yesterday’s three-week high at $7.06 1/4 and the contract high of $7.35 1/4 hit May7. In December futures, yesterday’s overnight gap remains partly open, with near-term support seen from $5.97 1/2 to $5.92 3/4. Additional support includes the 10-day average around $5.58 ¾, while near-term resistance extends from yesterday’s high at $6.18 1/4 to the contract high at $6.38.

Soybean futures are trading mostly 14 to 24 cents higher. Soymeal and soyoil futures are also sharply higher at midday.

• Soybean futures are being supported by USDA’s initial crop condition ratings, which came in lower than expected at 67% “good” to “excellent.”
• Weather forecasts signal limited rainfall chances across the dry northern and western areas of the Corn Belt this week. Rains will favor southern and eastern areas of the region.
• While weather is the driving force today, traders are bull spreading the market, with the July contract leading gains at midmorning.
• Soyoil futures are sharply higher, but the front-month July contract has not pushed above Monday’s all-time high.

Winter wheat futures are mostly 3 to 5 cents higher. Spring wheat futures have turned 8 to 10 cents lower.  

• HRS wheat futures were firmer overnight and during early daytime trade. But some profit-taking has crept into the market given the outlook for some rains across dry areas of the Northern Plains and Pacific Northwest.
• While there may be temporary relief in spring wheat areas, the rains won’t be enough to reverse the overall dry soils.
• Spring wheat conditions continue to decline, with USDA rating only 38% of the crop as “good” to “excellent” as of last Sunday.
• Traders are unwinding long spring wheat/short winter wheat spreads.
• Winter wheat markets are also being supported by slow harvest, which was only 2% completed as of last Sunday. Rains in some areas of the Southern Plains will continue to slow harvest activity.

Live cattle futures are mixed, with nearby live cattle firmer and feeder cattle lower.

• Signs of softness in the cash markets and an eroding technical posture are pressuring cattle futures, with August live cattle at risk for a fourth consecutive lower daily close.
• Recent slippage in boxed beef values stir ideas that the bulk of near-term restaurant and retailer buying has been completed for now, though prices remain historically high.
• Beef cutout values averaged $338.60 per hundredweight yesterday, down $1.95 from 340.55 on June 3 but still up 61% from about $210 at the end of 2020, according to USDA data.
• Futures downside may be limited by the discount futures hold to the cash cattle market. Live slaughter-ready steers yesterday averaged $119.92, up about 2 cents from the end of last week. Cash market activity isn’t likely to pick up until the middle to late part of the week.
• Feeder cattle traders are expected to keep a close eye on surging corn prices amid growing concern over extreme heat and dryness in the Midwest.
• Sagging technicals put the onus on bulls to hold key chart levels or close above key resistance, such as $121.22 in the August contract. For bears, downside technical objectives include closing prices below solid technical support at the June spike low of $114.62. First resistance is seen at last week’s high of $119.55 and then at $121.22. First support is seen at today’s low of $117.40 and then at $116.00.

June lean hog futures are holding near unchanged, while deferred contracts are weaker.

• Seller interest in June hogs is limited by ongoing strength in the cash and product markets.
• The average national direct cash hog price firmed $1.01 on Monday, while the pork cutout value rose $1.44. The cutout value is nearing the all-time high of $137.56, which was posted in July 2014.  
• After failing to take out Monday’s highs in early trade, deferred lean hog futures are facing some profit-taking pressure.
• But the downside remains limited to corrective selling until there are signs of a top in cash fundamentals.