Ahead of the Open | June 13, 2023
GRAIN CALLS
Corn: 5 to 10 cents higher.
Soybeans: 12 to 20 cents higher.
Wheat: SRW steady to 2 cents higher; HRW 1 to 3 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn and soybean futures strengthened overnight and finished near the session highs. Wheat traded lower for much of the overnight session but ended narrowly mixed. Outside markets are supportive for grains, with crude oil up around $1.50 and the U.S. dollar index down around 500 points this morning.
World Weather Inc. says temps will rise later this week and next week, though no excessive heat is expected. Rainfall will be spotty and limited across the Corn Belt during the next week. Western and central areas of the region, where moisture stress is already greatest, will be the driest.
USDA’s crop condition ratings dropped more than anticipated for corn and soybeans. As of Sunday, USDA rated 61% of the corn crop and 59% of the soybean crop as “good” to “excellent,” down three points each from the previous week. The portion of those crops rated “poor” to “very poor” increased two points each to 8% for corn and 9% for soybeans.
On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop fell 4.8 points to 360.9, while the soybean crop dropped 7.3 points to 350.6. The CCI ratings are now 18.8 points below year-ago for corn and 20.4 points below for soybeans.
Crop consultant Dr. Michael Cordonnier cut his corn yield forecast by 1 bu. to 178 bu. per acre, noting moisture stress across 45% of U.S. corn acres. He now projects the U.S. corn crop at 14.86 billion bushels. Cordonnier also trimmed his soybean yield by 0.5 bu. to 51.5 bu. per acre. He now forecasts the soybean crop at 4.48 billion bushels.
USDA cut its spring wheat crop rating by four points to 60% “good” to “excellent,” which was more than traders expected. On our weighted CCI, the spring wheat crop declined 13.6 points over the past week to 356.6, though that was still 3.2 points above year-ago at this time.
Conab raised its Brazilian soybean production forecast around 900,000 MT from last month to a record 155.7 MMT. The 2022-23 soybean export forecast was hiked 600,000 MT to a record 95.6 MMT. Conab increased its Brazilian corn crop peg by around 200,000 MT to a record 125.7 MMT. It left the 2022-23 Brazilian corn export forecast at 48 MMT.
CORN: July corn futures pushed above the 100-day moving average overnight after spiking that level on Monday but closing below it. Yesterday’s spike high at $6.23 3/4 is initial resistance, followed by the clustered resistance in the $6.45 to $6.47 area. Near-term support is at $6.15 3/4 and $6.14.
SOYBEANS: July soybean futures traded above the 40-day moving average at $13.84 1/2 overnight after failing to find sustained buying above that level on Monday. Yesterday’s high at $13.92 3/4 is initial resistance, followed by the psychological $14.00 level. Near-term support is in the $13.84 to $13.74 area.
WHEAT: July SRW futures continue to chop sideways to modestly higher, while remaining in the long-term downtrend. Last week’s spike high at $6.48 is near-term resistance. Near-term support is in the $6.28 to $6.21 range.
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after strong price action on Monday and supportive cash fundamentals. Cash cattle averaged a record $188.75 last week, a $6.72 surge. Packers bought 110,000 head of cattle last week, with 35,000 head of that total purchased for deferred delivery – the largest negotiated cash trade this year. As a result, demand for cash cattle is likely to be reduced this week, especially with packers slowing weekly kills to control inventories amid tightening market-ready supplies. That’s likely to slow the cash cattle advance, though feedlots will be reluctant to sell at lower prices. Wholesale beef prices continued to surge, with Choice up $4.50 and Select $4.53 higher on Monday, though movement was only 80 loads.
HOGS: Lean hog futures are expected to open with a mixed tone. June lean hog futures are expected to face some pressure as the contract finished Monday at a $3.435 premium to today’s cash index quote with contract expiration on Wednesday. Followthrough buying could be seen in some of the deferred contracts after strong gains on Monday. The CME lean hog index is up another 45 cents to $84.73 (as of June 9), extending its seasonal rise. The pork cutout value slipped 19 cents on Monday to $88.20, as weakness in loins and hams offset gains in the other cuts.
