By Dennis Smith | Grain PhD Ag Risk Specialist
Corn prices are lower in tandem with the improved crop condition ratings. IMO the ratings will back off next Monday. It’s going to be hot, very hot this week with little rain. Corn is starting to pollinate in IL in the middle of this heat wave. Widespread pollination won’t occur until the first week of August. Futures are down on a trend line. While it certainly may not hold, my point is we’ve dropped to levels where traders should be buying corn and not selling corn.
There’s no early read on cash hogs yet, I’m assuming higher. Butcher hog numbers are finally dropping off. This week’s kill is projected to come in down 2% compared to last year and down 4% from last week. Weights are expected to decline. It’s hot and getting hotter. If hog prices can’t /don’t rally in this environment we’re in for a long fall season. Data from China continues to indicate that ASF is still spreading and that they’re losing pigs, lots of pigs. Weekly pork export data is strong but it does not match up with monthly data. This tells me that the split carcass shipments by Smithfield are being picked up in the weekly series but not in the monthly data. The monthly data indicates year to date exports are down. The CEO of Smithfield, last week, indicated they’re not owned by the Chinese. What? Look for a rally today.
Live cattle bubbled toward unchanged late in the session on Monday. All settlements were well off the session lows. I’m expecting a fully steady tone in the cash steer trade this week. If correct, the discounted Aug and Oct contracts should attract buyers. Of course others speculate that cash will trade lower. The show list is a touch higher, reported at 251,500 compared to 245,400 last week. Beef is expected to trade flat to mostly lower this week. Packer margins should narrow. The bottom line is the fact that beef demand is good. We’ve cleared more beef year to date than last year and wholesale prices are higher than last year. Look for a rally perhaps into early August.
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