The Sunday overnight trade is risk off across the board. Some analysts call it a weather play others are wondering if the Federal Reserve has a surprise in store. Early on it appears it could be a volatile week of trade.
In the outside equities all eyes are on the Fed as they meet Tuesday and Wednesday. Wednesday afternoon they will release their latest on the economy and if they plan to adjust rates any. The early prediction is the Fed stays status quo. That is what happened last week in Europe with their central bank. Last week though CPI and PPI data screamed inflation at most levels of the economy. Of course the numbers were a little more relaxed when more volatile products like energy and food were removed from the equation, but never the less inflation is occurring.
In the grain complex there is plenty of selling in the overnight trade. Malaysian palm oil futures were hit hard down over 10%. That pressure also hit the soybean oil pit. At first glance it appears the selling may be a knee jerk reaction to forecasts becoming more friendly. However this week is still expected to be extremely hot. So the rains have to verify and actually be able to do some good if the heat is rolling.
Internationally wheat is catching some pressure as SovEcon raised its forecast for Russia’s 2021 wheat by 1.5 MMT to 82.4 MMT. Monday afternoons crop progress report will bring the latest in US winter wheat harvest.
Tuesday NOPA monthly soybean crush report will be released. Analysts are expecting US May soy crush at 165.1 mbu, which would be -2.6% less than the same month last year.
In the livestock complex cattle look to be stuck in a time loop with analysts expecting another round of steady cash trade. That doesn’t do much for futures which saw a little friendliness late last week. However if futures get back to par with cash they may not be able to go much further. Boxed beef started catching pressure last week as well. While still very strong in a historical perspective if boxed beef is going down packers are going to defend their strong margins. They seem to have a near perfect system worked at the moment.
On the lean hog side this week could highlight if there is more gas in the tank for the trade. The June contract will go off the board on Monday so July and August are the most active contracts now. Ribs were the strongest piece of the cutout last week. That could indicate that folks are barbequing and want more pork.
In the country last week cash was steady again for another straight week. The trade started on Tuesday once again and the price action in the South live deals had had a range of $118 to $120, mostly $119 to $120. Northern dressed business has had a range of $189 to $196, mostly $190 to $191.
Daily Slaughter Estimates Monday
119,000 hd today 119,000 hd wk ago 116,153 hd yr ago
482,000 hd today 481,000 hd wk ago 456,981 hd yr ago
Friday midday carcass cutout
Choice dn 0.48 337.77
Select dn 4.89 305.51
C/S Spread 32.26
Carcass up 6.64 140.69
Bellies up 24.42 230.40
Daily broker commentary:
Pre-opening grains with Mark Gold of Top Third Ag Marketing
Pre-opening livestock with Jerry Stowell of Country Futures
Midday market commentary with Mike Zuzolo of Global Commodity Analytics
Closing grain commentary with John Payne Daniels Ag Marketing
Closing market commentary with Jack Fenske with York Commodities