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Limit Up

By Tori Uhland

July 10, 2024

A holiday week in the ag markets is like a box of chocolates, you never know what you’re going to get.” Isn’t that the saying? I’m pretty sure it is…it holds true, at least. Last Wednesday was the best day for the soybean market as the trade did some short covering before Independence Day. Markets were closed on the 4th as well as for the overnight session with a hard opening on Friday morning. Soybean futures were weaker to start on announcements from a larger crop in Argentina than what the USDA had estimated. The Argentine 2023-24 bean harvest is considered finished and ended at 50.5 million tons, which is the highest in five years, despite the severe summer heat. It seems as though the path of least resistance in soybean futures is higher.

Corn prices are being supported by crop stress in the Black Sea region over the next two weeks. Weather forecasts in the US remain bearish, but there is potential for a heat wave moving into the Western Corn Belt over the next week or so. Below normal temperatures are expected in most of the Midwest which will keep crop stress at a minimum. Major news to move the markets is hard to find. December corn futures have resistance at $4.28 and support at the $4.14 level.

Wheat prices have been pressured as SovEcon raised their Russian wheat production forecast to 84.1 million tons from 80.7 million tons, after seeing better yields than expected. The crop estimates had previously been cut aggressively after the frosts in April and May were thought to damage crops worse than what it appears they did. In May, US wheat exports were 58 million bushels, down from 71 million last month and up from 54 million a year ago.

The United Nations Food and Agricultural Organization’s data from the world price index showed the prices of vegetable oil, sugar, and dairy products all increased in the month of June. This was offset by a decrease in the price of cereal products. The price index averaged 120.6 points in June, which was unchanged from May. The FAO index reached a three-year low in February. A record high was set in March 2022 after Russia’s invasion of Ukraine. The June 2024 number is 24.8% below the 2022 high.

US export sales recap last week showed corn sales lower than expected, hitting a 12-week low. Soybean sales were at the bottom of expectations, while wheat sales were higher than expected. Soybean meal sales were within expectations, and soybean oil sales were strong and above expectations.

China announced last week that the prolonged heatwave in their eastern, central, and southern regions may impact their production of rice and cotton. The high and prolonged temperatures are signaling a second consecutive summer of extreme heat.

December hog prices fell to a new contract low and had their lowest close in a year on Wednesday, while August futures closed strong. The higher pig production in the most recent hog and pig report is pressuring the forward months. The reversal higher on June 26 still projects higher prices. Cattle markets had strong price action last Wednesday. Cargill’s beef plant in Dodge City, KS resumed operations last week after heavy rains caused a roof to collapse and shut down the plant.

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