Corn and soybeans are slightly lower early Tuesday with wheat higher. Cattle have recovered, with hogs mixed.
Weather, Crop Ratings Cap Corn and Soybean Prices
Kent Beadle, Paradigm Futures, says corn and soybeans are seeing some pressure from weather and strong crop ratings.
USDA pegged U.S. soybeans at 70% good to excellent, up 4% from the previous week with notable improvements in states like Illinois which was up 6%.
U.S. corn ratings were unchanged at 70% good to excellent, but still the second highest condition score for this time of year in history.
Beadle says this has the trade focusing on higher yields and he thinks the markets are trading a 52.5 to 53 bu. soybean yield and around 186 bu. on corn.
Trade Uncertainty Lingers
Tariff noise and uncertainty is also serving as a headwind for the grain markets.
President Trump announced a framework deal with Indonesia this morning but with no details and the increased tariffs on major trading partners like Japan, South Korea, Mexico and the like leave the markets on edge or at least keep traders from buying.
Positive news on China also remains at bay and that has weighed on soybeans with ideas exports will not be able to keep pace in the new marketing year.
Wheat Bounces on Short Covering
Wheat futures are slightly higher, a surprising bounce says Beadle, considering the 4% improvement in spring wheat crop ratings Monday and some rain in dry production areas.
He says much of it is short covering as the market is oversold.
Cattle Recover
After a tough down day on Monday cattle futures are rebounding with the futures discount to cash supportive.
August live cattle are trading at a $18 discount and last week’s cash trade was $7.78 higher at $237.21, the second highest level in history.
“Cash has been the story and the fact that we just don’t have enough cattle. Plus, I still haven’t seen evidence that the consumer is backing away from higher beef prices,” he says.
Although Choice boxed beef was down another $1.57 on Monday.
Lean Hog Futures Mixed
Lean hog futures are seeing mixed action on Tuesday as July goes off the board at noon leaving August at an over $4 discount to the lean hog index.
Beadle says the funds pushed the long side of the market and had record length before taking some profits and could exit more of that position.
Seasonally, the cash and cutouts also start to cool which is why he thinks a top is in.
However, he says there are still some good profit margins for producers in the deferred hogs and he recommends they look at hedging.
