Corn closed the week 10 3/4cents higher. Private exporters reported sales of 157,300 metric tons to Mexico.
Weekly export sales showed a total of 8.5 million bushels with 5.5 for the 2016-2017 marketing year. This was above the 4.1 million needed to be on pace with USDA's June demand projection of 2.22 billion bushels.
In the weekly crop conditions report, U.S. corn crop conditions improved compared to last week with a rating of 68 percent good or excellent versus 66 percent expected, 67 last week and 75 last year. The eastern belt improved while the western belt declined.
Conditions improved 3 percent in Illinois (62 percent good or excellent), Indiana 1 percent (46), Iowa 1 percent (79) and Missouri 3 percent (66).
Conditions deteriorated in Minnesota by 3 percent (to 78 percent good or excellent), North Dakota 5 percent (56), South Dakota 3 percent (46) and Nebraska 4 percent (74).
Now what to expect in July. All of the U.S. corn is now planted and weather is the main focus of the market until we are past the key yield development timeframe. Our key yield development timeframe will occur past the normal timeframe, leaving July
fourth through the 20th as our timeframe most sensitive to weather. Typically, funds exit longs during the third quarter of the year as the market trades lower into harvest, before funds buy into fresh longs in the last quarter of the year in hopes of a post harvest rally. A threat of frost could force a short-covering rally, so be quick to change your marketing strategy if adverse weather threatens the Midwest.
Strategy and outlook: Look to make sales and lock in prices during rallies over the next 4 weeks.
Soybeans closed the week 50 3/4 cents higher. Private exporters reported sale of 120,650 metric ton of meal to Mexico.
Weekly export sales showed a total of 16.1 million bushels with 13.4 for the 2016-2017 marketing year. This raised total sales to 2.19 billion bushels, or 7 percent above USDA's June demand projection of 2.05 billion.
Soybean crop conditions fell 2 percent to 64 percent good or excellent versus 66 last week and 70 last year.
Conditions were unchanged in Iowa at 74 percent good or excellent, improved in Illinois 3 to 70 percent, Missiouri 1 percent (64) and deteriorated in Minnesota 1 percent (76), North Dakota 5 percent (53), South Dakota 9 percent (39), Nebraska 2 percent (70) and Indiana 1 percent (51).
The key pod setting stage looks to begin about July 15 and last until the Aug. 5 time frame at which biggest gains in yields estimates can surface with timely rain or biggest upside gains in futures will occur if heat and dryness occurs.
Highs are usually in by July’s end as there is normally weather that is threatening the development of the crop during the podsetting stage that will reduce yields and drive prices higher. With volatility extremely high, this is a high-risk weather market. Rain events that occur in late July and the first week of August should be sold as this will help the development of the crop.
Strategy and outlook: Producers need to make new crop sales on rallies during the next four weeks as large supplies of product will be hitting the market from not only the U.S. but also from South America.
Chicago wheat closed 6 1/4 cents higher, Kansas City wheat closed 7 cents higher and Minneapolis wheat 5 cents lower.
Private exporters announced sale of 140,000 metric tons of wheat to an unknown destination. Weekly export sales for all wheat showed a total of 13.8 million bushels, all for the 2017-2018 marketing year. This was below the 14.4 million needed in this week's report to be on pace with USDA's June demand projection.
Spring wheat conditions were 37 percent good or excellent, down 3 percent from last week and well below last year's 72 percent rating. North Dakota improved 2 percent.
Winter wheat crop conditions fell 1 point to 48 percent good or excellent compared to 62 percent last year.
Winter wheat harvest advanced to 53 percent complete, up from 41 last week, 56 last year and the average pace of 54.
The spring wheat looks to fully develop the head on all acres planted by the middle of July. Weather and its impact on yields and quality will be critical until about Aug. 5, with harvest beginning the last half of August. United States millers buy the spring wheat for domestic use, while the winter crop goes primarily to the export market. Problems in the key spring wheat states of Minnesota, North and South Dakota, Idaho, and Washington have forced aggressive buying by milling interests as they will need to gain control of the wheat crop.
If Canadian wheat prairies also have weather problems, U.S. millers will also have to become aggressive buyers ast here is no other close port for U.S. millers to turn to. Seasonally, wheat forms a low and rallies into September as demand improves and by September, the winter wheat producers will begin to seed their winter wheat crop after soybeans are harvested.
Strategy and outlook: Look to make sales and lock in prices during rallies over the next six weeks.
Live cattle closed $1.02 lower while feeder cattle closed $2.70 lower. Fed cattle trade in
the South was established at $117 to $118, $1 to $2 lower compared to last week. Trade in the North was established at $116 to $119, $1 to $2 lower this week. Dressed trade occurred at mostly $188, steady to $2 lower compared to the week prior.
Last week’s Fed Cattle Exchange online auction and the percent of cattle sold continues to under-perform compared to earlier in the year. There was two lots that sold this week at the same price, 1 in Kansas, and 1 in Nebraska. A total 529 head traded, out of the 2,093 on the list (25 percent sold). The weighted average price from the total auction sales was $117 versus $119 per hundredweight from last week's auction.
USDA steer carcass weights were unchanged from the prior week at 855 pounds and are 9 pounds below a year ago weights of 864 pounds. If weights to continue to increase, third quarter production is expected to swell. Net beef sales of 17,000 metric tons reported for 2017 were up 52 percent from the previous week and 36 percent
from the prior four-week average. It certainly appears the fundamental and technical trends have changed.
Strategy and outlook: Producers with cattle to market this summer and fall should be transferring risk with put options. Feed costs for the year should be locked in for the entire year.
Lean hogs closed the week 45 cents lower. Net pork sales of 13,200 MT reported for 2017 were down 50 percent
from the previous week and 39 percent from the prior four-week average. Weekly hog weights were 276.4 pounds, down a half a pound from the prior week of 276.9 pounds and are 0.3 pound’s below last year’s level of 276.7 pounds. Weekly charts show prices are nearly major resistance.
Strategy and outlook: Producers should have hedged 2017 production as prices tested weekly chart resistance. 2017 feed costs should be locked in for the entire year.
Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc., based in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb. Hoops can be reached at 417-501-5132.