Ahead of the Open | May 22, 2023
GRAIN CALLS
Corn: 3 to 6 cents higher.
Soybeans: 10 to 15 cents higher.
Wheat: SRW and HRS 3 to 5 cents lower; HRW 6 to 10 cents lower.
GENERAL COMMENTS: Corn and soybeans were supported by corrective buying overnight, while wheat faced followthrough selling. Fresh news is relatively limited this morning and outside markets are quiet, so chart-based activity will help guide money flow to open the week.
USDA reported daily soymeal sales totaling 225,000 MT to the Philippines for 2022-23.
The Corn Belt is expected to see normal to above-normal temps and limited rainfall this week, resulting in net drying over the region. The northwestern Corn Belt and Northern Plains will have better planting weather, though some rain is expected. Rains are expected across areas of the Southern Plains this week.
Another shipment of about 30,000 MT of European Union origin wheat, believed to be from Poland, is expected to be shipped to the U.S. in June or July. This follows two previous shipments of Polish wheat to the U.S. – one of about 31,000 MT shipped in April and another of about 32,000 MT shipped in January both to Tampa, Florida.
The price of Russian wheat with 12.5% protein content, delivered free on board (FOB) from the Black Sea in June, was $242 per metric ton, down $6 from the previous week, IKAR agriculture consultancy said.
Markets are keeping a watch on the debt-limit talk as the White House and congressional leaders try to reach an agreement. Treasury Secretary Janet Yellen has said the U.S. could exhaust its ability to meet debt obligations by June 1.
CORN: July corn futures are consolidating around last week’s lows. Near-term support is at last week’s low of $5.47, with additional support at $5.41 1/2. Near-term resistance is at the 5-day moving average at $5.62 1/2 and previous support at $5.69 1/4.
SOYBEANS: July soybean futures posted an inside day up overnight after bouncing from last Friday’s low at $13.04 3/4. That level will serve as initial support, followed by the psychological $13.00 mark. Near-term resistance starts at the 5-day moving average around $13.32.
WHEAT: July HRW wheat futures are into day four of the pullback from the recent highs, confirming a technical top. Traders are also unwinding long HRW/short SRW spreads, though the spread remains historically wide. Near-term support is at the psychological $8.00 mark. Near-term resistance starts at the 20-day moving average at $8.24 1/2 and is layered to $8.37 1/2. Front-month SRW wheat traded below $6.00 overnight for the first time since March 2021.
CATTLE: Lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open the week under pressure. Friday after markets closed, USDA’s Animal and Plant Health Inspection Service (APHIS) announced an atypical case of Bovine Spongiform Encephalopathy (BSE) was found in South Carolina. The U.S. has a negligible risk status for BSE and an atypical case will not alter that status. No major trade disruptions are expected, though traders may take a precautionary approach. Last Friday’s Cattle on Feed Report showed the May 1 feedlot inventory down 3.4%, placements down 4.2% and marketings down 10.1% from year-ago levels. On the surface, the report data is neutral as it lined up closely with pre-report expectations. But the underlying numbers are bullish, as this marked the eighth straight month of year-over-year declines in feedlot inventories. Wholesale beef prices firmed for a second straight day on Friday, with Choice up $2.79 and Select 33 cents higher, though movement totaled only 92 loads.
HOGS: Lean hog futures are expected to open with a choppy to mostly lower tone amid a lack of buyer interest. But the downside should be limited as the cash market continues to climb seasonally. The CME lean hog index is up another 71 cents to $79.13 (as of May 18), the highest since mid-March. After Friday’s losses, the premium in June lean hog futures was down to $3.895. The pork cutout value firmed 65 cents on Friday, though movement totaled only 207.4 loads.
