LEADING OFF: Grain and oilseed futures rallied overnight amid follow-through technical buying after Tuesday’s gains in the wake of the USDA report. Corn is up 5 to 7 cents, while soybeans and Chicago wheat are both up by about 10 cents. The report itself was bullish for corn and friendly for wheat, and neutral for soybeans. The report also looked friendly for cotton and rice. However, the rice market had already rallied for nine straight sessions prior to yesterday, and profit-taking emerged on Tuesday. Rice fell sharply yesterday, but is up 5 to 10 cents this morning.
In outside markets, crude oil is down about 80 cents, and gold is mixed. The U.S. dollar index is up 0.25%. U.S. equity futures indexes are mostly pointed to a lower open this morning.
Private sector hiring slowed in June and came in slightly below expectations, ADP said in its monthly jobs report this morning. The report showed private companies added a new 98,000 jobs in June, compared to 122,000 in May and below the average Dow Jones survey estimate of 110,000. The report is an appetizer for the main course, tomorrow’s Non-Farm Payrolls report from the Labor Department. That report is being released a day earlier than normal due to Friday’s Independence Day holiday, on which government offices and markets will be closed.
CORN: Yesterday’s grain stocks report was bullish for corn, coming in 130 million bushels below the average trade estimate, but it was also still 14% above last year, which should limit the bullish enthusiasm in the market unless some more crop problems emerge. Technically, corn posted bullish reversals off of fresh contract lows yesterday, but it also ended near mid-range for the day. We’ll need to see follow-through strength to confirm that technical signal – so far, so good on that front this morning.
While this week has brought some intense heat to the eastern U.S. and through the Midwest, the outlook overall is not too threatening for corn and soybean production. Says World Weather Inc: “Regular rounds of showers and thunderstorms will occur in much of the Midwest Friday into July 12 while temperatures are mild most often leaving much of the region with very high production potentials and favorable conditions for corn pollination and other crop development.”
The heat that does occur will generally be helpful to crops, particularly in areas of the eastern and lower Corn Belt where soils have been saturated. World Weather Inc. notes that the southwest Corn Belt will be warmest and driest over the next couple of weeks. Parts of the northwest Corn Belt, including eastern Nebraska, South Dakota, southwest Minnesota and parts of Iowa, will receive some much-welcome rains over the coming days.
EIA issues its weekly energy report this morning including an update on ethanol, and this afternoon USDA releases its monthly Grain Crushings report.
SOYBEANS: The market rode the coattails of corn yesterday, as the USDA reports came in neutral for soybeans. As with corn, the market posted an outside day up yesterday but finished at mid-range, and we’ll need to see some follow-through to consider that a bullish signal.
Ahead of this afternoon’s monthly USDA Fats and Oils report, trade estimates of the May U.S. soybean crush average 214.9 million bushels in a range from 214.0-216.3 million. At the average trade estimate, the May crush would be down 1.6% from April, but still up 5.5% from May 2025. Pre-report estimates of April 31 soyoil stocks average 2.214 billion pounds in a range from 2.165-2.250 billion. At the average of trade estimates, soyoil stocks would be down 9.4% from a month earlier, but up 18% versus a year earlier.
WHEAT: Futures have some upside momentum after all three classes posted bullish reversals higher on Tuesday after the USDA report. In the case of Chicago and K.C. wheat, these reversals were off of three-to four-month lows. In Minneapolis wheat, the reversal in the September contract was off a contract low. While the report was not wildly bullish, with the reversals and ongoing concerns about how El Nino could affect crops globally in the second half of the year, the near-term bias is now to the upside.
USDA yesterday pegged U.S. all-wheat acres at 42.740 million, about 950,000 below the average of pre-report trade expectations and about 650,000 below the low end of the range of expectations. USDA pegged June 1 U.S. wheat stocks at 920 million bushels, 11 million below the average trade estimate and 16 million below its previous 2025-26 ending stocks forecast.
LIVESTOCK: Lean hog futures were mixed again on Tuesday, with nearby months boosted by firmer cash markets and hot Midwest weather while December and more deferred contracts fell under pressure from ongoing demand worries and bull spreading. October futures posted their highest close in more than 2 weeks but also finished below midrange for the day. October now has nearby chart resistance at $82.88, with nearby support at $81.65. We still expect the market to work its way higher in the near term.
Live cattle futures were weaker yesterday with pressure from technically-driven long liquidation/selling and seasonal demand worries spurred by the U.S. heat wave, with losses limited by futures discounts to last week’s Plains cash trade. Most-active August live cattle fell $1.15 to $242.43, while October futures fell 73 cents to $236.65. Feeder cattle futures fell about $3 in most contracts on Tuesday with pressure from the live cattle and from the strength in corn.
Plains direct cash cattle markets remained quiet Tuesday, but trade could develop by Wednesday afternoon or Thursday as market participants will want to get business done before the 3-day July 4 holiday weekend.
