CORN HIGHLIGHTS: Corn futures posted a very negative looking day after gaining 4 to 5 cents on the overnight trade as prices reversed lower ending the session 3 to 13-1/4 cents lower as Sep led today's drop closing at 4.41, back below the 21-day moving average. Sep also had a range today that was larger than Friday's range and with a weaker close, this is called a bearish key reversal. Dec corn closed down 12-1/4 at 4.47, however, today's low in Dec corn at 4.46 did not exceed Friday's low of 4.45-1/2, so this is termed a hook reversal. However, both futures closed below the 21-day moving average, a disappointment for bullish traders who on Friday seemed to be aggressively buying once prices pushed through this level. Expectations for rainfall from tropical storm Barry pushing into the southern Midwest will help dryer areas that have gone without rain in recent weeks. Yet, the western regions of the Corn Belt are expected to stay dry and the longer range forecasts are indicating basically above normal temperatures and below normal precipitation. So, one will have to wonder if today may be just a one day event or the beginning of lower prices. Until we see follow through to the downside, we'll believe that today is probably a one day event in which the trade will once again consolidate awaiting further weather direction, crop ratings, and the all-important August 12 report which acres will be more defined.
SOYBEAN HIGHLIGHTS: Soybean futures, like corn and wheat, finished with double digit losses as futures gave up 11 to 11-1/2 cents as Nov led today's drop closing at 9.20. After four consecutive positive closes, today's hook reversal downward looked somewhat negative, however, the 21-day moving average held as support and a one down day after four up days doesn’t' necessarily mean much in and of itself. However, a hook reversal and weakness in other commodities could be signaling that row crop prices are overvalued. The key is follow through. News is rather sparse with no significant direction from the newswire as far as progress made with China. Weather is the dominant factor as of now and a growing warmer and dryer trend has helped provide underlying support in recent sessions, but an increased chance for rainfall pushing northward from tropical storm Barry is helping to relieve some dry conditions. However, the longer range forecast again seemed to be leaning more toward a dryer pattern, and so while rain is welcomed now, continuous rain will be needed, but especially for plants that are rather small in stature due to late planting and expectations for more mid-summer higher temperatures.
WHEAT HIGHLIGHTS: Wheat futures, after posting a very friendly looking end of last week, had a difficult session today posting a very ominous and large bearish key reversal. It looks like the positive news with production cuts in major wheat producing countries is factored into the market with today's reversal. We don't want to read too much into one day, but with good harvest results, the U.S. so far for on expectations for harvest to continue to move forward, the market may have a difficult time. If behind on sales, today's reversal would suggest you get current with recommendations. Weekly export inspections at 11.6 mil bu were behind the 18.2 mil bu needed on a weekly pace to meet USDA's export estimate of 950 mil.
CATTLE HIGHLIGHTS: Cattle markets closed mixed today, with Aug lives up 2 cents to 108.50, Oct lives were down 20 cents to 109.77, and Dec lives were down 12 cents to 114.10. Aug feeders were up 5 to 141.65, and Sep feeders were up 5 cents to 142.60. Choice beef values closed 97 cents lower on Friday afternoon to 212.80, their lowest value since July 11, 2018. Choice beef bounced 68 cents today to 213.48 at mid-session. The choppy to lower beef trend has been a pressure point, especially considering expectations for beef demand to pick up soon. Cash trade last week was seen between 113 and 116, 1.00 to 3.00 higher than the previous week. Beef production was down .5% from last year despite a higher slaughter number. Lighter cattle weights are supportive and show that producers are staying very current. The USDA is looking for a drop in production of 480 mil pounds from quarter 4 to quarter 1. This will be the third largest drop on record for that time period. There was a similar drop for quarter 4 of 2002 to 2003, and futures rallied 20% in that time period. Price action today was relatively dull. The Aug live cattle contract made a bullish outside session, but the deferred contracts simply drifted lower. Feeder markets held some nearby support levels, but couldn't move much higher. Futures are still overbought in the short term which could attract sellers on fundamental weakness.
LEAN HOG HIGHLIGHTS: Hog markets closed mixed to mostly positive today. Jul hogs went off the board 27 cents lower to 70.77, Aug hogs closed 55 cents lower to 80.10, Oct hogs closed 67 cents higher to 73.90, and Dec hogs were up 1.35 to 71.90. The CME lean hog index was up 8 cents to 70.73 today. This is the first positive close since June 21. Carcass cutout values were down 26 cents at Friday's close to 70.57 vs 72.46 the previous week. Cutouts were down another 56 cents this morning to 71.09. China spot pig prices were up 3.1% today, which leaves them up 6.3% for the month, and up 37.6% year to date. The recent rally has been indicative of a major drop in the China/hog population. Over the weekend, the Chinese Administry of Agriculture and Rural Affairs indicated that the hog herd in June was down 25.8% from last June, and the sow herd was down 26.7% from last June. Hong Kong pork prices had an all-time high this week. U.S. sales of China have been slow lately, but the more serious the pork deficit gets in China, the more likely China is to start buying large amounts of U.S. pork again. Today's session was relatively quiet from a technical standpoint. Aug and Oct hogs were mostly steady holding nearby support levels. Dec hogs closed at their 20-day moving average level for the first time since May 23.