Fundamentals: Corn values in Chicago settled with sharp losses, after the extended weather forecast facing a bulk of the Corn Belt has turned much drier. Positioning ahead of this afternoon's expected planting revelation, or lack thereof, was likely performed in the midst of last week's impressive rally. U.S. corn futures slid 10-12 cents across both old and new crop positions. Rain will remain abated until roughly Wednesday, at which point the extreme upper Midwest, Wisconsin and Minnesota, will encounter gradually increasing showers. This system should move easterly across the Ohio River Valley, and into central Illinois, Indiana, and Ohio through the end of this week. Drier, but cooler weather is expected to develop following, and persist through next weekend. The 6-10 day forecast offers below average precipitation to the entire Midwest and Delta, average temperatures across the central and western Corn Belt, and below average temperatures to eastern areas. For the week ending May 8th, corn inspected for shipment abroad totaled 34.26 million bushels, versus previous guesses ranging from 35-40 million bushels. As of Sunday, May 11th, 51% of the corn crop has been planted, relative to 71% one year ago, and a running 5-year average of 77%. Again, this knowledge is likely priced into deferred corn futures and this afternoon's revelation was generally in line with previous estimates. Also of note, just 11% of the corn crop has emerged, versus an average of 33%. The favorably dry forecast offered too much of the Midwest, however, may provide additional downside momentum overnight.
 

Technical: July corn was sharply lower on Monday. The lower action confirmed Friday's contract high reversal top. Resistance will be Friday's new contract high of 639. Support today was found at the 10-day moving average of 613.4. Rather than a breakout, the chart appears to be in a very gradual uptrend channel, with 585-640 being tomorrow's support-resistance. Stochastics and the RSI are showing more of a sideways to slightly higher trend that seems to mimic the price trend channel.
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Fundamental: Similar to corn futures, soybean values encountered heavy selling ideas on a relatively improved forecast currently facing the Midwest. Without fundamental news to increase follow through buying on USDA's tight new crop stocks projection, coupled with lagging crude oil values, soybeans found ample selling interest. Value was lost across the complex. Gaining little interest over the last week has been the heavy, consistent rains plaguing Midwestern farmers and its association to soybean plantings. As of Sunday, May 11th, however, just 11% of the U.S. soy crop had been planted, versus an average of 29%, and similar levels seen last year. Significant lags are noted in Minnesota, Illinois, and Iowa - all substantial producing states. The drier pattern, again similar to the corn market, should help heavily advance planting efforts through the forthcoming week, thus today's sell off. Weekly soybean inspections, for the week ending May 8th, were revealed at 13.1 million bushels, exactly the midpoint of previous estimates. Short term trading ideas will hinge upon the release of updated weather models, and Thursday's highly anticipated meeting between Argentine President Kirchner and its grain producers.
 

Technical: July soybeans were sharply lower on Monday. Early action for the session was higher to post reversal action. However, the sell off lacked enough strength or follow-through, respecting support at the 50-day moving average of 1343.7 and the 100-day moving average of 1336.3. The low-range close below the pivot point suggests a bearish bias for Tuesday. Directionals seem to have a slight uptrend working, although momentum was easily disrupted with today's action. The long-term trend is still upward, with the Elliott Wave theory showing the rally from the April 1 low as the start of wave 5. The last two swing highs found resistance at the 62% retracement of the March decline (1415). Bears are looking for a leg down.

Fundamental: Without fresh news on which to rally or sell-off, American wheat futures settled narrowly mixed to begin the week. Weather forecasts offered to the Central Plains have remained relatively constant, and Iraq's latest tender for optional origin received little fanfare. European milling wheat for November delivery lost just .50 euros, in chorus with limited trade in the U.S., to settle at 196.50 euros per ton, roughly $8.28 per bushel. Weekly wheat inspections tallied 20.59 million tons versus previous estimates of 15-20 million tons. The recent shipment pace is certainly sustained, but slightly less than what is currently required to meet the USDA's projection of 1.280 billion bushels. Dry weather will persist across the entirety of the U.S. hard red winter wheat belt through Wednesday. It is then that heavy rains, roughly .75"- 1.00" are forecast to sweep across eastern Texas and Oklahoma. An active precipitation pattern is likely across the Central Plains into the weekend as Texas, Oklahoma, Kansas, and Nebraska are slated for moderate accumulation. Weather across the Northern Plains' spring wheat belt is viewed as favorably dry through the latter portion of May. This afternoon's Crop Progress report revealed that 47% of the U.S. winter wheat crop is now rated as good or excellent, equaling the same figure from one week prior. 81% of the spring wheat crop has been planted, versus an average of just 78%.
 

Technical: July wheat was slightly higher, seeing a narrow trading range on both sides of unchanged. The chart appears to have taken on a sideways trend, wit support and resistance being the recent lows and highs (i.e. 790 and 840). Directionals have been trending up from an oversold condition, but the upward momentum has stalled out to take on a sideways trend at slightly below mid-range values. The bulls are still looking for the start of wave 5 of the long-term uptrend. The bears are looking for a continuation of the recent downtrend, thinking that Friday's gains were the extent of the correction. Resistance is the 20-day moving average of 837 and trending lower. Support still seems to be the psychological 8.00 level.

Live cattle futures were slightly lower on Monday. There wasn't much to talk about as a feature. Trade was relatively quiet, with the downward bias attributed to longs selling out to pocket some profits. On the charts, this looks like some back and fill, which should be the start of a consolidation zone going into Friday's Cattle on Feed report. Cattle slaughter last week was a bit bigger than expected, with Saturday's schedule revised up to put the week-to-date figure at 705,000 head, up 4.9% from last year. Show lists are mixed, with some up and some down, putting the total slightly above last week. This won't matter much if beef prices continue to find support, which means that buyers need to keep stepping up for more. Last week's beef movement was slightly larger than last year, with domestic beef movement down slightly and the export market moving enough more to make the total larger.

Feeder cattle futures were higher, seeing triple-digit gains for some of the deferred contracts. The sharply lower corn futures amid ideas of better planting weather prompted the makings of a breakout rally. August finished strong despite the resistance of the 100-day moving average at Friday's close and the filling of the late-April gap that could have attracted renewed selling. Even so, the gains did not get above the April high of 111.15, which could serve as resistance once again. Technically, futures are not overbought yet so there could be follow-through buying. There especially could be help from spreaders that are looking at relatively narrow feeder-live spread, buying feeders as the FCQ-LCZ spread starts to rally from an oversold condition. That spread appears to have very good support at around the 2.30 area.

Lean hog futures were mixed on Monday. The nearby May contract was higher again, supported by firm cash fundamentals that included steady to $1.50 higher cash hog prices. The lean hog index is projected at 78.28, another $1+ higher and the one-day price is almost $79.00, with today's gains supportive of May futures over 80.00. June futures however are trading at a $3 discount, suggesting that traders think that the strength can't be maintained to the normal mid-to-late June high. I would agree that before Memorial Day next week that some cash weakness should be expected, but I still think the strength will return with strong demand and seasonally tighter supplies.

Milk futures were higher. The 2.25 cent higher cheese prices helped attract buying. The action was two sided, seeing a wide-ranging session as June bounced 50 cents off its lows. June's higher close failed to confirm Friday's contract high reversal. The recent trade would suggest consolidation between today's low of 19.01 and Friday's contract high of 19.80. Consolidation would further be favored ahead of next Monday's Milk Production and next Thursday's Cold Storage reports.