Grains ended lower Monday, while cattle and hogs soared.
Chuck Shelby with Risk Management Commodities says funds returned to sell in the grain complex on Monday erasing a portion of last week’s gains.
There was uncertainty in the market on several fronts including weather, trade and the escalation of fighting between Russia and Ukraine.
Shelby says some of the weather models have backed off the hot, dry forecasts for the second half of June and portions of the Western Corn Belt that have been dry are receiving some rain.
However, the markets continue to discount the excessive rain in the Eastern and Southern Corn Belt which have caused planting delays and will result is some prevent plant acres.
“It might be as much as 1.5 million acres of corn that are lost as it’s past the last planting date for crop insurance and producers will suffer coverage losses. I don’t know if that will show up in the June 30 Acreage Report but right now the market seems to be ignoring it,” he says.
July corn made a new low for the move again on Monday, so the markets has also been overlooking the strong demand with exports still running nearly 27% ahead of last year and robust ethanol production.
Shelby is hopeful that demand will finally be recognized in the June WASDE Report on Thursday.
There was also some uncertainty surrounding the U.S. and China talks in London as traders awaited some signal of progress.
Cattle made all time highs again in both live and feeder cattle futures on the heels of record cash.
“With the big discount the futures are holding to the cash I think the market will need to continue to move higher and fund traders seem to recognize that,” he explains.
Shelby doesn’t think beef prices have gotten high enough yet to curb consumer demand either.
Lean hog futures are benefiting from the rally in cattle and are also hitting new contract highs in all months.
Tighter hog numbers due to disease and strong demand is support the hogs with cutouts and the Lean Hog Index running to levels not seen in the market since August of 2023.
“I think grilling season demand is strong for both beef and pork,” he says.
