Corn Crop Starts Out The Best Since 1994
May 30, 2018
Good Morning! From Allendale, Inc. with the early morning commentary for May 30, 2018.
Grain markets are struggling with the negative news it has been dealt after the holiday on Monday. Tech tariffs are on again between US and China, corn crop conditions near record good/excellent, rain in the forecast for the Midwest and strong US dollar to name a few. Technical picture has chartist concerned as corn closed below 20-day average and July soybeans close below 100-day average on Tuesday. Be prepared for choppy active as the month of June approaches.
Weekly Crop Progress report showed conditions as of Sunday the 27th for corn at 79% good to excellent, which was well above the 72% trade expectation. This is the second highest rating in history, which ties 1994’s first rating. The highest first rating was in 1991 at 81% rating. The I-States: Illinois is at 83% G/E, Indiana 78% G/E, Iowa 82% G/E.
Corn planting progress was 92% complete vs. 93% expected vs. 90% last year and 90% average.
Soybean planting progress was 77% complete vs. 73% expected vs. 65% last year and 62% average.
Winter wheat conditions improved to 38% good/excellent vs 36% G/E last week and 50% last year.
Funds were estimated net sellers of 22,000 corn contracts, 9,000 soybeans, 8,500 wheat, 2,500 soymeal and 2,000 soyoil contracts on Tuesday.
Brazil’s trucker strike is slow to unwind even with after the government agreed to subsidize diesel fuel prices. Early estimates are that Brazil’s farmers have lost $1.76 billion since the strike started 10 day ago.
Index funds begin their roll out of the July contracts to a deferred position. Rogers funds already start and the will touted Goldman Roll should start next week.
Fed cattle exchange is offering only 449 head in todays auction. Recent sales have not had any affect on weekly cash trade as all cattle offered were no sales. Expecting to not see much difference this week.
Weak US stock market, concern over trade agreement with China, larger supply of market ready cattle on the horizon and beef cutout values trending lower has futures traders pressing prices.
June live cattle futures are being supported by its discount to last week’s cash cattle prices. However technical support comes in at 101.37. A close below that level could open the gates for a retest of the 97.00 area.
Record net short positions by managed money funds shown on Friday CFTC report in helping provide buying support. Cash hog trade should start to see numbers become tighter and weights to drop. Recent abnormally hot temperatures are slowing rate of gain.
Lean hog futures rallied on Tuesday to test the long-term down trend resistance level. July futures contract could use a close above 79.85 (100 day moving average) to change the trend.
Dressed beef values were mixed with choice up .13 and select down .97. The CME Feeder Index is 135.04. Pork cutout value is up .74.