Early Monday, Dow Jones futures are trading lower with markets mixed in Europe and lower in Asia. May crude oil is a little higher, but still showing concern about an increase of coronavirus infections in Europe and India, reported Reuters. Soybean oil is trading lower, pressured by news Brazil is temporarily reducing its biodiesel mandate. Spring wheat is starting lower with rain in this week’s forecast for Manitoba and the Dakotas. On China’s Dalian exchange, May corn was down 0.6%, May soybeans were down 1.7%, September soybean meal was down 0.6% and May bean oil was down 0.9%. July common wheat on China’s Zhengzhou exchange was unchanged. June Malaysian palm oil is trading down 3.1%.
Cattle futures came under pressure Friday partly as a delayed reaction to another week of slower exports, partly due to it being a Friday and partly due to the market in need of a price correction to relieve the overbought technical status. Looking back through the week, there was no reason for futures to decline on Friday as much as they had, or if at all. But such is the nature of the market. The key this week will be if traders will buy back into the weakness and if cash prices will trade higher. The anticipation is that higher cash is almost assured due to strong demand. Cutouts rocketed higher last week, causing packers to aggressively raise bids to procure needed cattle. That is not expected to change this week as demand seems to be red hot. There is no reason last week’s strength should not carry over into this week.
Hogs did not feel the pressure from cattle. They held their own with most contracts posting higher prices. Thursday is the last trading day for April hogs with futures holding right in line with cash. May 2021 through April 2022 futures again made new contract highs Friday with the exception of August. August seems to have been the victim of spread trading and has not been able to make a new contract high since April 1. There is no other reason the contract should be lagging the others. The National Direct price moved higher Friday with cutouts showing an impressive gain. Hogs supplies are expected to tighten, keeping packers aggressive now as long as profits are good.
Commentary Courtesy of DTN/Progressive Farmer