CORN AND SOYBEANS:
Excellent crop condition ratings are forcing traders to dial in above trend yields. The most recent weather models are putting more rain into western IA which is the current trouble spot in the Corn Belt. We sold soybean oil yesterday and we’ve been actively hedging production in corn and soybeans. The rally into the fourth of July was the rally to sell and we were there. Corn never gave a second chance. However, soybeans recovered and gave one a second chance to sell last week.
Cash is called higher, up .50 to $1.50. The late report from yesterday confirmed that the national weighted average price was up $4.75. Packers are looking for hogs, needing hogs with the negotiated volume yesterday at 17K. The volume of pork loads last week was very large in excess of 4,000. Yet the Sat kill projection stands at 190K and the weekly harvest projection is expected to be up nearly 11% from last year. In tandem with the weakening dollar and low pork prices, demand, huge demand appears to be surfacing for U.S. pork.I’m expecting a gap higher open today. Open interest surged higher yesterday, rising by 2630.
IA reports a about 400 head yesterday at $157 and 99 cents, steady with last week. This is not enough volume to call it a market. The beef was mixed. Like pork, the volume of beef slated for export from last week was huge, reported at 1750 loads, the largest ever. This indicates that nearly one fourth of beef production last week is moving to the export market, more than double the norm. Feeders appeared to put in a top yesterday. I’m expecting both markets to press downward. Feeders off the chart pattern and technical action and LC due to the premium to the cash steer market. It’s difficult to imagine domestic demand at this time of year creating any kind of meaningful power in the cutout values. Look for a lower close.
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