Afternoon Market Highlights


Highlights

  • Grain markets were dominated by USDA data today as favorable weather conditions cover much of the Midwest.

  • As of 1:20pm, Energy markets were mixed with crude oil trading 25 cents higher, heating oil was lightly mixed and unleaded was weaker. Nearby ethanol was 2 cents firmer.

  • The US$ index was 250 ticks firmer and the DJIA was 59 points lower. 

Corn

  • Corn futures surged higher after the 11am USDA report. Support came from a reduction to old crop and new crop carryout projections. 2017/18 exports were raised 75 million bushels, imports reduced 5 million for an 80mb carryout reduction to 2.102bb. The 2018/19 carryout was projected at 1.577bb after reducing carry-in and raising corn used for ethanol.

  • World carryout also was friendly as the USDA now has the 18/19 world carryout projected at 154.69mmt vs 192.69mmt in 17/18 and 227.89mmt at the end of the 16/17 marketing year.

  • CZ was able to push back to $4.00 before setting back slightly. Technically CZ has a chart gap at $4.10 to $4.11, the 200 day MA is $3.97 ¾ and the 100 day MA is $4.05 ¼.

  • At 8am, USDA announced the US sold 114tmt old crop and 38tmt new crop to Mexico.

  • Barge freight was weaker again today, CIF was mixed but weaker late as the board rally bought a few bushels. Domestic markets show signs of firming as producer selling is muted.

  • Spreads; N/U 9 ¼ carry, U/Z 11 ½ carry, Z/H 9 carry, Z/N 20 ¾ carry. 

Oilseeds

  • Soybeans prices saw a bounce after the USDA raised crush in both the 2017/18 and 2018/19 crop years. The USDA remains optimistic on US exports in 18/19 as they continue to work on the theory that Chinese demand continues to grow at an aggressive yearly pace.

  • The USDA pegged Brazil 18/19 production at 118mmt, and put 17/18 production at 119mmt, up 2 mmt from the May report and 1mmt above CONAB. They also estimated this year’s Argentina production at 37mmt down from 39 in May. The USDA raised world carryout .4mmt for 17/18 to 92.49mmt. They pegged 18/19 carryout at 87.02mmt, up .32 from May.

  • Despite today’s USDA data, SX remains at the low end of the 6 month trading range with another new low for the move and has only been lower 3 sessions so far in 2018.

  • Weather is generally favorable but remains early in soybean development.

  • Closes; July at $9.54, up ¼ cent, August at $9.59 ½, up ½ cent, and November at $9.74 ½, up ¾ cent.

  • Spreads; N/Q 5 ¼ carry, Q/X 15 ½ carry, N/X 21 carry, X/F 7 ¾ carry, X/N 20 ½ carry. 

Wheat

  • Wheat prices blasted higher on the release of the USDA report as it appears that the market focused on the Russian production figure of 68.5mmt, down from 72mmt in May. The USDA raised both the 2017/18 and 2018/19 world carryout estimates nearly 1.8mmt each. They kept intact the year on year reduction from 272.37 to 266.16mmt, but overall the world remains adequately supplied.

  • The USDA did lower world wheat feed usage 2.92mmt, with a 2mmt reduction in Russia wheat feeding. Russia exports are expected to decline to 35mmt from 40.5mmt, reflecting smaller production.  

  • Also of note was the MW/KC spread trade as MGEx now only sits at a 27 cent premium over KC on the Dec, 36 cents on the Sep and 39 cents on the July as HRW harvest reports confirm protein higher than recent years.

  • July closes; Mpls at $5.92 ½, up 2 ¾ cents. KC at $5.53 ½, up 18 ¾ cents and Chicago at $5.34 ½, up 20 cents.

  • Spreads; Mpls N/U 12 carry, U/Z 13 ¾ carry, Kansas City N/U 14 ¾ cent carry, KWN/N 65 ¾ carry, WN/U 15 carry and WN/N 68 ¾ cent carry.

  • Continue to see bids across the southern HRW areas stronger than what many cash markets reflect as elevators try to buy blend and carry bushels. 

Cattle

  • Cattle futures ended the day lightly mixed and $1.00 + off session lows in light volume choppy trade. June live cattle ended the day lower while the August and October contracts closed nominally better. June is a $4.30 premium to August and $1.17 premium to October. Technically October trades near its 50 day MA of $106.82.

  • Feeder cattle were slightly weaker with little feature in today’s market.

  • The USDA handed the market some friendly news when it raised the export projection for beef and they reduced production while increasing US per capita consumption.

  • Boxed beef cutouts were higher mid-day with both selects and choice higher on light movement. 

Lean Hogs

  • Lean hog prices were firm with the July and August contracts leading the firmness, up about $2.00.  The June contract posted its highest price since early March.

  • Cash hogs were firm today amid modest buying interest.

  • The USDA raised its pork export projection for 2018 today despite trade tensions with China.