By: NATHAN STUEDLE
St. Joseph Post
GRAINS:
July corn closed up 3 cents per bushel at $4.45 1/2 and December corn was down 1/2 cents at $4.40 1/2. July soybeans closed up 5 1/4 cents at $10.77 3/4 and November soybeans were up 1 3/4 cents at $10.61 1/4. July KC wheat closed up 11 1/4 cents at $5.23, July Chicago wheat was up 7 1/2 cents at $5.24 3/4 and July Minneapolis wheat was down 3 3/4 cents at $5.77.
Corn futures ended Wednesday in mixed fashion, with spot July rallying back to close firm, while new-crop December gravitated around unchanged for much of the day. In the weekly petroleum status report from the EIA, ethanol production slipped close to 3% from last week to 993,000 barrels per day. With another four to five days of mostly clear weather ahead for the central U.S., the corn planting pace is already well ahead of the average pace, which should continue to advance quickly. Nearby futures continue to be supported by the higher exports and tightening U.S. and world supply.
Perhaps the biggest story on Wednesday is the continued ascent of July bean oil futures, closing into a new high and finishing higher for the fifth consecutive day. That was instrumental in getting soybeans to close higher as well. Traders are optimistic that a new bill proposed by Congress would possibly extend the 45Z biofuel credit for several more years if it were passed. Another aspect of the same bill would be to restrict the use of foreign feedstocks including used cooking oil (UCO) from China. The net effect of such a bill would be to boost domestic soybean oil usage. Soymeal continues to be the weight on the soy complex as both Brazilian and especially Argentine soymeal are offered far cheaper than U.S. On a positive note, the WASDE report estimated a far lower soybean ending stocks number of 295 mb, with the prospect for that to tighten even further if the record yield of 52.5 bushels per acre (bpa) is not achieved.
The wheat markets finished a mixed day, with both Chicago and Kansas City futures, after an early challenge of the lows each finished with a gain. Minneapolis wheat, on the other hand, set a new contract low and failed to trade higher all day. Both Chicago and KC have been under severe pressure for weeks as fund managers amassed a record large net-short position. Both markets had become oversold, and likely profit-taking led them to a rare higher finish. Wednesday marks the second day of the annual Wheat Quality Council Tour of Kansas with the first day results showing a 50.5 bpa yield. That was the result on the tour from Manhattan to Colby and would compare to 49.9 bpa a year ago and is well above the five-year average of just 45.1 bpa. NASS recently pegged Kansas production to be 12% higher than a year ago at 345 mb. There were drought conditions witnessed and some wheat streak mosaic disease as well. The second day of the tour will cover the southwestern and south-central Kansas areas.
LIVESTOCK:
The momentum in the live cattle complex faded in afternoon trade as traders push the nearby contracts $1.00 to $2.00 higher into Wednesday's noon hour, which is a bold move given that boxed beef prices were lower this morning. Although the market has yet to see what the fed cash cattle market will do in terms of prices, and aside from the fact that boxed beef prices were softer this morning, traders continue to seek higher prices in the live cattle sector, but faded to finish moderately lower at the closing bell. Asking prices of $224 to $225 are noted in the South but asking prices have not yet been established in the North. It looks like trade will be delayed until Thursday or Friday.
The feeder cattle complex followed the live cattle market's direction as its contracts also traded fully higher into today's noon hour. But that's not to say that the feeder cattle market didn't have enough support of its own, as just yesterday afternoon the CME feeder cattle index climbed to yet another new all-time high of $302.40, showing just how strong buyer demand is in the countryside. However, that did not hold through to the closing bell as all contracts finished the day $3 to $4 lower at the closing bell.
The lean hog complex was "tucking its tail and running" from the market's technical resistance pressure. The complex posted a significant rally on Tuesday, but without enough fundamental support, the market is back to trading lower as there simply isn't enough support to conquer the resistance. Midday pork cutout values were slightly higher, but traders were left searching for more support.
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