Written Commentary
SOYBEANS
Price action is slightly higher to start the week and the 1st bean crop condition report of the season later this afternoon is expected to show conditions north of 70% good/excellent. Planting progress is expected to be around 90% complete. Once the condition report is released later today, trading action will focus on USDA’s June supply/demand report released Wednesday at 11 AM Chicago time and is expected to show slightly higher old and new crop ending stocks than last month. Argentine bean production is expected to be unchanged from May but Brazilian production is anticipated to be cut 2.2 million tonnes to 151.8 million. Friday morning, USDA announced a flash sale of 104,000 tonnes of US beans to China for old crop. China still has no sales on the books for new crop. NOPA revised their April crush number over the weekend to 169.9 million bushels crushed, up 3 million bushels from their initial report. They stated data from Indiana was misreported and caused the error in the numbers. Bean oil stocks were raised to 1.832 billion pounds, compared to 1.755 in the last report. Argentina’s oilseed union says they will begin a strike on June 12 to protest new labor laws. The bulk of the US Midwest saw a mostly dry weekend and the 1-5 day forecast has a few showers for the Western belt and Great Lakes but otherwise dry. The 6 to 10 day forecast shows above normal precipitation in the northern Midwest, while temperatures will be above normal in the center and Western belt. July beans closed Friday near the lows of the week and if Wednesday’s USDA supply/demand report comes out slightly bearish is expected, weather will need to turn adverse here in the US to give July beans a chance to move back over last week’s high of 1204 ½. So far, extended forecasts are showing above normal temperatures but no extreme lasting high-pressure ridge that would shut off Midwest moisture.
SOYBEAN MEAL
Soymeal prices have started off the week on a strong note after NOPA issued a rare revision to their strangely low April soybean crush number that was put out a couple weeks ago. April US soy crush was revised up 3.402 million bushels to 169.436 million bushels and soyoil stocks were revised 77 million pounds higher to 1.832 and pounds. NOPA said crush was misreported for Indiana and that caused the error. July soymeal prices are strengthening on the revision after falling over the last 2 weeks. June 17th, NOPA will release their May crush estimate. At least 4 new processing plants will be coming online now through August.
It is strike season in Argentina and the Oilseed Workers Union, SOEA, is the latest to announce they will go on strike June 12 to protest new labor laws. Strikes are common during Argentina’s harvest as worker unions get the most bang for their buck during that timeframe. Depending on how they last, most strikes do not have a major impact, although if crush plants are shut down, soybean product supplies can quickly tighten.
CORN
Prices are starting the week stronger on deepening drought in Mexico and anticipation of a friendly USDA supply/demand report Wednesday. Commitments of Trader’s data showed Managed Money increased their net shorts by 80,000 contracts as of June 4 to 213,000 contracts short, a 5-week high in bearish sentiment. Historically, that is a very large fund net short position for this time of year and would be significant fuel for a rally if weather conditions turned adverse. For now, the 1-5 day forecast has a few showers in the Western corn belt and the upper Great Lakes but otherwise features a mostly dry Midwest pattern. 6 to 10 and 8-14 day models have potential for above normal precipitation for the northern Plains and temperatures above normal for the bulk of the Midwest. The Buenos Aries Grain Exchange left their Argentine corn crop unchanged at 46.5 million tonnes, compared to USDA at 53 million. Wednesday’s June supply and demand report will likely feature cuts to Argentine and Brazilian corn estimates and slightly lower old and new crop US corn ending stocks. The US corn balance sheet does not look burdensome, and prices are likely to be more sensitive to any weather issue than beans, where there is more of a balance sheet cushion. Close in resistance on July futures is 458 and prices should continue to see buying support on any pullbacks below 445.
WHEAT
After opening higher overnight, wheat prices are once again sinking lower for the 9th session in a row on advancing US harvest. Friday’s trading volume was the highest since November 2023. The main feature this week will be the June USDA supply/demand report on Wednesday morning which is expected to show US old crop ending stocks unchanged from last month and new crop slightly higher than the May number. All wheat production is expected to be raised slightly from May as well. The Black Sea forecast has some potential relief for half of the dry area over the next 10 days and southern Russia temperatures will be the hottest in the region. Russia has declared a state of emergency in 10 Ag regions due to recent frost and dryness, but this is mainly to allow farmers in those regions to file insurance claims and Russia’s Ag Minister says there should be no issues fulfilling export commitments. Pressure is also coming from Turkey halting wheat imports until October to protect their domestic farm producers, with Russia saying they will need to divert 3 million tonnes of wheat shipments they had previously expected to send to Turkey. Russia says they have sent their 1st wheat shipment to Brazil from their Leningrad port. Heavy US harvest pressure is the main bearish driver for prices and seasonal pressure will be hard to overcome until harvest reaches the halfway mark. July Chicago wheat is holding moving average support and retracement support is just below at 615. If the pullback extends further, 100-day moving average support stands at 604.
CATTLE
August cattle had a relatively quiet session to end the week Friday and cash trade last week occurred in the south at $185 and $190 in the north. The cutout has stalled and we are moving past the seasonal peak demand, which may mean packers will be bidding less aggressively over the next couple weeks. Bird flu headlines remain an issue for the bull camp and until prices can move back above the 200 day moving average at 178.45 on August, sellers remain in charge. The USDA estimated cattle slaughter came in at 118,000 head yesterday. This brings the total for the week so far to 607,000 head, up from 497,000 last week at this time but down from 609,976 a year ago. The USDA boxed beef cutout was up $1.04 at mid-session Friday and closed 54 cents higher at $316.75. This was up from $313.20 the previous week. The previous low was $316.21 on June 6. The previous high was $316.88 on June 4. The estimated average dressed cattle weight last week was 852 pounds, unchanged from 852 the previous week and up from 809 a year ago. The 5-year average weight for that week is 813 pounds. Estimated beef production last week was 522.0 million pounds, up from 497.6 million a year ago.
HOGS
July hogs rebounded late last week and Friday’s trading volume was the highest since March 12. Technical indicators were very oversold last week and prices were due a bounce. We look for 1st resistance on July futures at 95.00 and 95.75. Estimated US pork production was strong last week at 521.2 million pounds, up from 464.1 the previous week and up from 501.2 a year ago. The CME Lean Hog Index as of June 5 was 91.92, down from 92.06 the previous session but up 91.49 the previous week. The USDA estimated hog slaughter came in at 466,000 head yesterday. This brings the total for the week so far to 2.382 million head, up from 1.920 million last week at this time and up from 2.302 million a year ago. The USDA pork cutout, released after the close Friday, came in at $100.30, up 76 cents from Thursday but down from $102.33 the previous week. The previous low was $99.54 on June 6. The previous high was $100.48 on June 3.
MILK – CLASS III
July Class III Milk rebounded from initial pressure as it rallied up to a new contract high last Tuesday, and then turned sharply to the downside and fell to a 1 1/2 week low on Thursday before finishing the week with a moderate loss.
The USDA reported that milk production is easing down across the board, with some producers saying storms and heavy rainfall have put a damper on output. The rest of the country has seen their production numbers evaporate as rising temperatures start to slow milk volume.
Cream loads are generally available across the country to meet most needs, but industry participants indicate volumes are tightening. Retail butter demand continues to be strong or steady throughout the nation, with food service demand strong to steady in the West and unchanged in the Central and East. Cheese production schedules are steady, and retail cheese demand is expected to increase through June.
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