Gauging from the overnight action, the markets would appear to be telling us that the washout witnessed yesterday in the corn market was a bit excessive. No, we did not reach all the way back down to the lows that had been posted on the 19thof the month (3.60 Dec.), but we did record the lowest close for a spot contract since January. In case you are curious, for spot soybeans, this could be the lowest close since February 2016. If we finished right now, for the week, December corn would be down 8 ½ cents, November beans 33-cents and December wheat 15-cents. More telling though would be the losses for the month. December corn is down 44-cents, December wheat 57-cents and November beans $1.46 and the largest monthly loss in that market in four years. It almost seems fitting to point out that the last cargo of US beans scheduled to reach port will dock late in the afternoon on the 5thof July, less than eight hours before T-Day.
As a whole, the Hogs and Pigs report fell within the range of estimates but if anything lay to the higher side. All Hogs and Pigs 3.4%, Kept for Breeding 3.5% and Market Hogs 3.4%. If there were one number that would be considered negative, it was breeding as it was 1.8% above the average estimates and even 1.4% above the highest estimates. This would suggest we have an ample number of hogs coming to market in the next quarter and beyond and with the export trade uncertainty, that does not offer much encouragement for sustained rallies. Of course, for the grain side of the industry, foretells continued solid demand.
We do have a little international news ahead of today’s releases. SovEcon has trimmed their estimate for the Russian wheat crop, taking it from 73.1 MMT to 72.5. Not a major change but if correct would be more than 15% below last year’s output of 85.8 MMT. The EU also lowered wheat production estimates, taking it down 2.65 MMT to 137.6 MMT. Stats Canada released updated estimates just this morning and now projects total wheat acreage of 24.7 million acres, which was right at trade expectation and is 2.31 million above last year. Corn acreage is estimated to be 3.64 million compared with 3.56 last year and soybeans at 6.32 million versus 7.28 million in 2017.
We do at least have one little snippet of good news this morning. It would appear that someone in Mexico has decided to take advantage of the pre-report/pre-tariff breakdown in price and has purchased 130,632 MT of beans for the 2018/19 crop year.
One last time, here are the trade estimates for today’s USDA reports; Quarterly grain stocks as of June 1st– Corn 5.27 billion bushels, Beans 1.215 billion and Wheat 1.095 billion. Corn acreage is estimated to come in at 88.46 million, versus 88.03 in March, beans at 89.68 million compared with 88.98 and wheat at 47.15 compared with 47.34.
As I have pointed out numerous times in the past, it is not unusual to witness reversals in trend around the beginning of each month and around holiday breaks of which we will have both of next week. While I cannot say if that will happen next week, with the anticipatory beat down, we have witnessed this month, and the virtual elimination of any risk premium in prices, it would seem that the conditions are ripe for such.