Ag markets seem set to start this week on a downbeat

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Corn began the week firmly on solid export news Monday, then gathered support from the USDA Crop Progress report overnight. Traders were somewhat surprised that the latest reading for crop conditions, at 64% good to excellent, wasn’t somewhat better. Tight old crop conditions continued supporting July futures, whereas benign weather forecasts are probably limiting strength in new crop futures. July corn rose 0.75 cents to $6.6925/bushel early Tuesday morning, while December skidded 0.25 cent to $5.3825.

Soybean traders apparently expected the Crop Progress report to show substantial improvement in Corn Belt conditions last week, but were seemingly disappointed by the Monday afternoon results. The fact that plantings were only 85% complete seemed significant. Given those developments, it was not terribly surprising to see the soybean complex trading higher Tuesday morning. July soybean futures gained 5.25 cents to $15.1775/bushel in early Tuesday trading, but July soyoil edged 0.06 cents lower to 48.78 cents/pound, and July soybean meal climbed $4.7 to $453.8/ton.

The weekly Crop Progress report stated the U.S. winter wheat harvest at just 11% complete last weekend; and while that topped the year-ago result at 5%, it was far behind the five-year mean at 25% complete. The report did state spring wheat conditions at 68% good to excellent, which marked a strong improvement from the 62% result posted last week. July CBOT wheat surged 7.75 cents to $6.8825/bushel as the sun rose over Chicago Tuesday, while July KCBT wheat advanced 7.25 cents to $7.21, and July MGE futures moved 4.5 cents higher to $8.0475.

After suffering from seasonal pressure in recent weeks, cattle futures proved surprisingly strong Monday. Traders seemed particularly focused upon strength showing up in choice-grade beef values Monday. However, one now has to wonder if a short-term advance can be sustained, since cash and wholesale prices seem likely to be quite weak later this month and in early July. Futures dipped again overnight. August cattle slipped 0.20 cents to 119.05 cents/pound early Tuesday morning, while December slid 0.25 cents to 125.05. August feeder cattle futures skidded 0.15 cents to 144.37 cents/pound, and November was unchanged at 150.55.

With the June contract having expired last Friday, CME hog traders are now ambivalent about the outlook for second-half futures. That is, they have been impressed with recent cash and wholesale strength, but history strongly suggests those gains will be reversed in early summer. Still, the discounts now built into those contracts seemed to support them early this morning. July hog futures gained .02 cents to 97.97 as traders reached the CME pit Tuesday morning, while December inched 0.02 cents lower to 81.95.

Cotton futures suffered a big reversal on long-liquidation and profit-taking Monday, then extended those losses overnight. The late decline probably represented follow-through selling, since the results of the weekly Crop Progress report actually seemed supportive (due to relatively low condition readings, particularly in Texas). July cotton fell 1.29 cents to 86.14 cents/pound in early Tuesday morning activity, while December dropped 1.4 to 87.54.

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