Impressive Day for Corn

June 1, 2009 07:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Corn moves above January highs... Yesterday was an impressive day for the corn market. Futures traded slightly lower for much of the session, but rallied late to finish 3 to 4 cents higher in most contracts while neighboring soybeans remained below unchanged.

It was good to see corn (finally) move above January highs, while soybeans and wheat traded lower. July corn futures settled 1/4 cent above the January high of $4.49 1/4. This signals bulls carry momentum and opens upside potential to the next level of resistance at $4.72 1/4 and $4.82 1/4. However, if buying dries up, it would suggest a near-term high (or longer-term high) has been posted.

Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 2 to 3 cents lower. Futures were mostly around 3 cents lower overnight amid light profit-taking. Futures traded slightly lower for much of the session yesterday, but rallied late to finish 3 to 4 cents higher in most contracts. With the strong finish, bulls carry momentum into overnight trade. July corn futures settled 1/4 cent above the January high of $4.49 1/4. That could give the contract a strong technical boost if followthrough buying is seen at this level. Next resistance is at $4.72 1/4 and $4.82 1/4.

Soybeans: 7 to 9 cents lower. Futures saw spillover from yesterday's profit-taking losses and from weakness in crude oil overnight. Futures closed 3 to 9 cents lower yesterday, which was a mid-range finish. Futures were pressured yesterday by profit-taking following strong gains the previous day. August soybeans posted an inside day of trade on the charts and finished mid-range. Resistance lies at Monday's high of $11.83 3/4 and support lies at last week's low of $11.22.

Wheat: 11 to 13 cents lower. Futures were weaker overnight amid profit-taking. Futures favored losses through the day and closed mostly weaker. Kansas City and Chicago futures closed 3 to 6 cents lower in most contracts, while Minneapolis futures closed narrowly mixed. Much of the pressure in the wheat pit came on spillover from the previous day's sharp gains to produce a "turnaround Tuesday" reaction. However, downside risk was limited to light profit-taking, signaling momentum remains with bulls.

Cash cattle expectations: Watching beef market. Boxed beef prices were 58 to 68 cents lower Tuesday, while movement totaled 263 loads. Price pressure in the boxed beef market points to lower cash cattle trade in the Plains later this week, especially if cattle futures extend losses. Most traders are expecting cash cattle to eventually trade at $83 or lower in the Plains.

Futures call: Mixed. Futures are called to open mixed following yesterday's losses amid some possible short-covering. Futures saw some spillover from the hog pit. Yesterday, August live cattle violated support at last week's low of $81.23, the March low at $80.95 and the February low at $80.70 today. That leaves the contract low at $78.15 as support on the daily price chart.

Cash hog expectations: Steady to weaker. The average pork cutout value dropped another $1.18 Tuesday. While packers moved a very strong 152.5 loads of product, sharp decline in price will put further pressure on cutting margins and cause packers to lower cash hog bids. With margins deep in the red, some packers may reduce late-week kill runs.

Futures call: Mixed. Futures hog futures gapped lower yesterday and extended losses to close sharply to limit lower. Nearbys led losses as traders worked on narrowing the premium futures hold to the cash index.  June hogs are now trading at about a $2 premium to the index, which is
considered much more in line for this time of year.

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