Grains continued to push higher over night with spot soybeans now over $15 and more contract highs set in corn and soybeans. Cash corn bids continue to surge higher and are now well in to the $6s across much of the Midwest. It is no secret that corn supplies are tighter than estimated and domestic demand remains strong in April. Early Thursday, the weather map is mostly dry and overnight temperatures did not get as cold as expected. The seven-day forecast expects moderate rain amounts in the central and Eastern Corn Belt, heavier amounts south of Iowa to the Gulf States.
As with corn, commercials are bidding up the front month as a way of securing scarce soybean supplies ahead of delivery. Cash bids in excess of $15 are now common in the eastern Midwest and are starting to be seen as far west as Nebraska and South Dakota. On China’s Dalian exchange, September corn was up 1.0%, July soybeans were up 0.8%, September soybean meal was up 0.7% and September soybean oil was up 1.3%. July common wheat on China’s Zhengzhou exchange was unchanged. June Malaysian palm oil is trading up 2.5%.
Just when we thought traders gained confidence to buy the break, the opposite happened. Cattle plummeted Wednesday, erasing the gains of Tuesday. Increasing grain prices are relentless, and feedlots do not want to play poker, so they folded in order to move market-ready cattle as quickly as possible. Packers took advantage of the current weakness of futures and increasing feed prices to bid lower. Some feedlots took those bids Wednesday anywhere from steady to $3.00 lower. Accepting lower bids might be the lesser of two evils. It is almost a given that cash will not trade higher the rest of this week. The selling pressure Wednesday might carry over Thursday before traders will turn their attention to the Cattle on Feed report due to be released on Friday. Boxed beef was again solidly higher, indicating strong demand. This has packers giddy as they can pay less for cattle and get more for product.
Hogs futures turned tail after initially opening higher. Spillover pressure from cattle seems to have had an influence. Higher grain prices are also beginning to have an impact on trader psychology. Farmers may want to move more hogs to the market pressuring prices, but that will also compound the tightness of supply later this year. Cash was higher Wednesday, but cutouts were lower. Demand resistance still has not been reached and should limit downward pressure on futures. Pork exports will be key to price direction Thursday as well as Friday. Saturday hog slaughter is projected to be 63,000 head.