Market Snapshot | June 28, 2022

Corn futures are firmly higher at midmorning, led by a gain of about 15 cents in the July contract.

• Corn futures extended overnight gains after weaker than expected USDA ratings stirred concern extreme June heat may be hampering crop development. The near-term Midwest weather outlook appears to be unthreatening, though dryness could become a concern.
• USDA late Monday reported 67% of the U.S. corn crop in either “good” or “excellent” condition as of Sunday, down from 70% a week earlier and below trader expectations for a combined reading of 69%.
• 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 fell 6.7 points to 369.5, which was 2.8 points below the five-year average.
• “Crop should remain favorably rated in much of the Midwest during the next 10 days to two weeks as mild temperatures… and at least some rain should aid establishment of newly planted crops with shallow root systems while more advanced crops will have adequate subsoil moisture to support crop development,” World Weather Inc. said today.
• Traders will continue to closely follow Midwest weather the next couple days before focus shifts to USDA’s Acreage and quarterly Grain Stocks reports June 30. USDA is expected to raise its estimate of U.S. corn plantings by about 370,000 acres to 89.86 million ac.
• December corn futures rose as high as $6.67 3/4, after dropping 21 cents Monday to $6.53, the contract’s lowest close since March 29. Near-term resistance is seen at last Friday’s high at $6.76 1/2.

Soy complex futures are broadly higher, with soybeans up around 25 cents, nearby soymeal up over $10 and nearby soyoil up about 100 points.

• Soybeans are extending overnight gains after deteriorating USDA crop ratings fueled further corrective buying following last week’s sharp losses.
• USDA rated 65% of the U.S. soybean crop good-to-excellent as of Sunday, down from 68% a week earlier and contrary to expectations the number would hold unchanged. Based on the Pro Farmer CCI, the soybean crop declined 5.4 points to 360.6, which was still 0.4 point above average.
• Midwest dryness isn’t a major market concern yet, but near-term forecasts hold limited moisture potential. “Rain will be light and infrequent enough that many areas dry down overall, which is not abnormal for this time of year, and timely rain will be needed in July to keep conditions favorable for crops,” World Weather said.
• Crop Consultant Dr. Michael Cordonnier noted topsoil moisture in areas including eastern Missouri, eastern Nebraska and northwestern Iowa is below the crop-weighted 20-year average and declining. “The current long-range forecast probably does not have enough rainfall to reverse the long-term dryer trend,” he said in a weekly report.
• Malaysian palm oil futures rose 1.3%, a second straight daily gain, on concern domestic mill closures will curb supplies.
• November soybeans rose as high as $14.68 1/2, after gaining 8 1/2 cents Monday. Near-term resistance is seen at the 10- and 100-day moving averages, both around $14.84 1/2.

Wheat futures are higher, led by gains of 17 to 18 cents in nearby SRW contracts.

• September SRW futures rose for the first time in four sessions and September HRW rose for the first day in seven as short-covering and bargain-hunting boosted wheat markets following sharp declines last week.
• Expanding harvest pressure and weak technicals likely will limit price upside in winter wheat. The winter wheat harvest was 41% complete as of Sunday, up from 25% a week earlier and 6 percentage points ahead of the normal average. Harvest exceeded expectations for 40% completion.
• Also, USDA rated 59% of the spring wheat crop good-to-excellent, unchanged from the previous week. Based on the Pro Farmer CCI, the spring wheat crop slipped 3.8 points to 360.4, though that was still 17.9 points above the five-year average for the date.
• September SRW wheat rose as high as $9.49 3/4 after dropping 19 cents Monday to $9.17 1/2, the contract’s lowest closing price since Feb. 28. Initial support is seen at Monday’s low of $9.13 1/2.

Live cattle and feeder cattle are mostly lower at midmorning.

• Live cattle futures are under mild pressure after bullish USDA Cattle of Feed numbers failed to generate much buying enthusiasm Monday, suggesting traders are skeptical last week’s cash strength will continue.
• USDA-reported live steers last week averaged $144.55, up 88 cents from the previous week, though there remained a wide discrepancy between trade in the Southern Plains and the northern region. Traders expect roughly steady prices in the Southern Plains again this week, while the northern market is likely to remain firmer given tight market-ready supplies.
• Choice beef cutout values rose $3.70 Monday to a two-week high of $268.68 on movement of 99 loads.
• August live cattle are trading within Monday’s range, with support at Monday’s low at $132.35 and resistance at the 40-day moving average of $134.25.

Hog futures are mostly firmer after rebounding from initial declines.

• Nearby lean hog futures bounced back from an early drop near two-week lows as firm cash fundmentals continue to support the market.
• The CME lean hog index rose 44 cents today to $111.35 (as of June 24), the highest since early August and up nearly $12 from mid-May. August futures’ discount to the index has widened to over$6, suggesting traders sense the cash index is close to peaking.
• Pork cutout values fell $3.17 Monday to $109.03, near a two-week low and led by a drop of nearly $15 in bellies. Movement was stronger at 311.5 loads.
• August lean hogs fell as low as $103.45, the contract’s lowest intraday price since June 15, before trimming losses.