Grain and livestock futures all end lower in a risk off day.
Rich Nelson of Allendale says it was tied to outside markets, the fast-planting pace and another HPAI case in an Iowa poultry flock.
“Now an Iowa based egg laying farm is infected and more than 4 million birds need to be culled. Keep in mind last week there was a story of around 1 million birds were infected out of Minnesota,” he says. He says the bird flu case psychologically impacts the grains with ideas of lower feed demand.
The weather concerns have also been alleviated by the planting pace USDA reported on corn at 83% done and soybeans at 68%, which are both ahead of the 5-year average.
“Keep in mind from our view this corn pace does imply a very minimal yield drag off a trend yields but it’s not enough to change the general supply story and for soybeans you could argue higher yield,” Nelson reported.
It is also end of the month which may have resulted in some profit taking after the grain markets rallied during May.
However, is the grain market starting to put in a top?
The global weather concerns for wheat, focused on Russia and Ukraine, have not gone away and India now says it will import wheat for the first time in six years.
However, Nelson says these factors may be adequately priced into the current market and the corn and soybeans may also have enough weather premium for this stage of the growing season until a summer weather story surfaces.
“We also have to balance this out with the fact that we have a good U.S. crop right now for both Hard and Soft Red Winter wheat, which are running above USDA’s current hopes,” he says.
Cattle futures consolidated and saw some end of month profit taking after making new highs for the move on Tuesday.
The market is still holding a sizable premium to last week’s record cash of $190.09 but Nelson says the cash was artificially pushed by packers slowing chain speeds creating a supply squeeze just ahead of peak Memorial Day demand.
Nelson says the live cattle futures are implying a drop in cash prices in coming weeks in the low $180-$182 range for a late summer low. That’s actually not bad. It’s a 3% cut from the traditional normal of a 10% cut from spring to summer.”
He says the tighter cattle supplies are still coming in the last quarter of 2024 and all of 2025.
Meanwhile lean hogs make new lows for the move as Nelson says the cash market has been essentially stuck the last month. “This market is removing the futures premium to the cash and funds are doing it with clear confidence,” he says.
