Wheat pops on crop report while Meats still struggle

Peter McGinn General Commentary

June cattle closed below the 132-price level for the first time since late October/early November. Monday’s price action seemed to show strong support above the 132-price level, as it hit a low down to 131.025 but rebounded and closed at 133.55. Wednesday it looked to me like the market wanted to retest the 136 highs or possibly even fill the gap back from late April. The regional cash cattle prices seem to be coming closer together as I have heard Kansas had a few head traded at 140 and Nebraska sold 3151 head at 143.78. This is coming off of a 146 high just a week ago.  The slaughter numbers that came increased about 2.8% year over year from this time. This close makes me want to stay on the sideline for tomorrow and even into early next week for that matter. If the market fails to breakdown even further tomorrow and instead shows some more strong support like it did on Wednesday, then I suspect that the bull camp would find some confidence and make an attempt to close the gap all the way up to 138.  

The USDA crop progress and WASDE reports came out today at 11am CST as well and for the most part both corn and beans came within line for the report’s expectations. The biggest mover from the report was wheat, where it was expecting a 1.82 billion bu but came out at 1.729 billion bu. The wheat stocks came in underneath the analysts expected number of 664 million bu, the actual was 619 million bu. These factors, along with some technical factors, had July wheat bounce 65c today and I think it will continue to the upside and get back to the early March highs.