Morning Market Report- 4/7/21- Grains Start Higher on Wednesday

Grain trade nudged higher overnight with slight gains of one to three cents across all commodities (corn, soy, wheat) as we hit mid week. It will be interesting to see if we keep trading last week’s USDA report into Friday’s new USDA WASDE report or not on Wednesday. China’s Dalian exchange showed May corn up 1.0%, May soybeans up 0.8%, September soybean meal up 0.4% and September bean oil up 1.6%. July common wheat on China’s Zhengzhou exchange was unchanged. June Malaysian palm oil is trading up 1.4%.

The increase in cattle futures did not do justice to the increase of cash already this week. Packers were willing to pay as much as $4.00 higher than last week and some feedlots were willing to accept those higher bids rather than hold out for more later in the week. This can be looked at two ways. Feedlots need to move cattle and wanted to get on the list rather than wait for potentially higher bids and risk not getting cattle sold for another week. Also, feed is not cheap and the longer market-ready cattle are held the less profitable they might be. Futures continue to lead the way higher, giving feedlots some confidence packers will pay more. Strong boxed beef prices indicate demand is surging as consumers want beef for grilling and restaurants want beef to satisfy customer demand. Packers need to purchase cattle and are hopeful bidding $4.00 higher early may get the job done.

Hogs seem to be struggling a bit due to slightly lower prices again on the National Direct Hog report, along with cutouts not showing as much strength as they once had. Prices could be reaching a plateau after an incredible run higher. However, demand remains strong and concern over tightening pork supplies in the second quarter is on the forefront of packers’ minds. Deferred futures were the ones showing strength Tuesday with triple-digit gains in October 2021 through May 2022 contracts.