Wheat field

Birds fly over a wheat field near Mitchell, S.D.

Corn closed the week 25 1⁄4 cents lower. Private exporters did not report any sales.

Export sales in the third week of June totaled 25.7 million bushels with 20.8 million for the 2016-2017 marketing year. This was above the 6.2 million needed to be on pace with the U.S. Department of Agriculture’s June demand projection of 2.22 billion bushels.

In the weekly crop conditions report, corn was 67 percent good or excellent, unchanged from the previous week, but below expectations of 68 percent. Last year at the time, the crop rated 75 percent good or excellent.

Ethanol production came in at 990,000 barrels per day, down 12,000 barrels from the week prior. It was the second week in June for production to fall below 1 million barrels per day. Ethanol stocks are down 200,000 barrels to a stock of 22.3 million barrels.

The corn market failed near resistance and turned lower on benign weather into the end of June. While there is still time for a weather market to develop, that time is running out as good rains in the eastern cornbelt leaves the western belt as the lone dry area remaining. Corn is pollinating in Missouri and rains will help the crop reach full yield potential.

Strategy and Outlook: Look to make sales and lock in prices during rallies over the next four weeks.

SOYBEANS

Soybeans closed 34 3⁄4 lower. Private exporters did not report any private sales.

Weekly export sales showed a total of 4.2 million bushels with 4.1 million for the 2016-2017 marketing year. This raised total sales to 2.17 billion bushels, 6 percent above USDA’s June demand projection of 2.05 billion bushels.

The crop progress report for late June saw soybean conditions improve 1 percent from the prior week to 67 percent good or excellent. The crop rated 73 percent good or excellent at the same time last year.

Soybean planting was 96 percent complete heading into the last week of June. That’s about on track with last year and slightly ahead of the average 93 percent.

The soybean market is falling dangerously close to major long term weekly support that has supported the market in 2015 and 2016. Without a weather threat on the horizon, prices are likely to continue to work lower. There is still time for a weather rally to develop but heavy selling looks to cap any rally attempts.

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.

WHEAT

Chicago wheat closed 6 1⁄4 cents lower, Kansas City wheat closed 8 3⁄4 lower, and Minneapolis wheat 19 1⁄4 cents higher.

Egypt bought 175,000 metric tons of wheat from the Ukraine and Romania. Weekly export sales for all wheat showed a total of 19.9 million bushels, all for the 2017-2018 marketing year. This was above the 14.9 million needed to be on pace with USDA’s June demand projection of 1 billion bushels.

In the weekly crop progress report, spring wheat conditions surprisingly fell from 45 to 41 percent good or excellent when the trade was expecting a 47 percent rating. At the same time last year, spring wheat rated 76 good or excellent.

This year’s crop was the lowest rated in 26 years. Only 13 percent of the South Dakota crop was rated good or excellent. North Dakota, the largest spring wheat producing state has 42 percent in the top rated category, and Montana is only rated 19 percent good or excellent.

Winter wheat crop conditions came in at 49 percent good or excellent versus 50 percent expected, 50 percent the previous week and 61 percent last year.

Winter wheat harvest is 28 percent complete versus 31 percent expected, 17 percent last week, 23 percent last year and 25 percent average.

Strategy and Outlook: Look to make sales and lock in prices during rallies over the next six weeks.

LIVE CATTLE

Live cattle closed $2.82 lower while feeder cattle closed $2.92 lower after the third week in June.

Light fed cattle cash trade occurred in the North and South. Cattle in the North traded at $122 per hundredweight live, down $8 to $10 from the prior week. Dressed trade was at $196 per hundredweight, down $10 to $15. Cattle in the South traded at $122 per hundredweight, down $6 to $10.

The Fed Cattle Exchange online auction was held the third week in June as the exchange returned to its original format. Most cattle were priced too high to catch a bid, and only two lots ended up selling. A total 457 head traded hands out of the 2,148 on the list. That’s 21 percent sold.

The weighted average price from the total auction sales was $123 versus $136 per hundredweight from the auction two weeks before.

USDA steer carcass weights were unchanged from the prior week at 847 pounds and were 17 pounds below a year ago weights of 864 pounds. If weights continue to increase, third quarter production is expected to swell.

Net sales of 16,600 metric reported for 2017 were up 96 percent from the previous week and up 60 percent from the prior four-week average.

The monthly cattle on feed report showed cattle and calves on feed for the slaughter market totaled 11.1 million head on June 1. The inventory was 3 percent above June 1, 2016.

Placements in feedlots during May totaled 2.12 million head, 12 percent above 2016. Net placements were 2.05 million head. Marketings of fed cattle during May totaled 1.95 million head, 9 percent above 2016.

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.

HOGS

Lean hogs closed the week 70 cents lower. Net sales of 24,700 metric reported for 2017 were up noticeably from the previous week and up 49 percent from the prior four-week average.

Weekly hog weights were 277.5 pounds, down 1.9 pounds from the prior week of 279.4 pounds and are 1.7 pounds below last year’s level of 279.2 pounds.

In the monthly cold storage report, total red meat supplies in freezers were down 5 percent from the previous month and down 7 percent from last year. Total pounds of beef in freezers were down 10 percent from the previous month and down 11 percent from last year. Frozen pork supplies were down slightly from the previous month and down 4 percent from last year. Stocks of pork bellies were down 6 percent from last month and down 59 percent from last year.

Strategy and Outlook: Producers should have hedged 2017 production as prices tested weekly chart resistance.

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.