Ahead of the Open | June 16, 2023
GRAIN CALLS
Corn: 8 to 15 cents higher.
Soybeans: 15 to 25 cents higher.
Wheat: 12 to 18 cents higher.
GENERAL COMMENTS: Corn and soybean futures sharply extended their weather-driven rallies overnight, while wheat actively followed to the upside. Strong gains are expected to carry over to the start of daytime trade. How markets finish the week ahead of the three-day holiday weekend will be dependent on
Forecasts remain dry over much of the Corn Belt during the next week to 10 days, with periods of hot temps also likely. The driest areas will be the central and eastern Corn Belt, as weather events in the Gulf of Mexico keep those rains in the Southeast and out of the central United States. Any rainfall in the western Corn Belt will be spotty and limited.
It is “impossible” to extend the Black Sea grain deal under current circumstances, the speaker of Russia’s upper house of parliament, Valentina Matviyenko said, Interfax news agency reported. Matiyenko said “the limits of our patience... have been exhausted,” reiterating comments made earlier this week by President Vladimir Putin and other senior Russian officials. However, she also said it would be important to avoid exacerbating a food crisis for poorer countries. While Russian officials continue to bemoan the grain deal, a Kremlin official told Interfax an early withdrawal was unlikely.
Russia lowered its wheat export tax for a nineth straight week. The tax for June 21-27 will be 2,612.9 rubles ($31.10) per metric ton based on an indicative price of $250.30. That’s down from a rate of 2,629.6 rubles per metric ton the previous week and the lowest since the week of Oct. 12-18, 2022.
CORN: December corn futures traded as high as $5.87 overnight, pushing above the 200-day moving average, something that hasn’t happened since late November of last year. The next upside target for bulls is the February double-top at $5.98 3/4, followed by the psychological $6.00 mark and then the mid-January high at $6.06. The contract is short-term overbought, so some profit-taking ahead of the long weekend wouldn’t be surprising, though the downside should be limited unless forecasts shift.
SOYBEANS: November soybean futures traded as high at $13.18 1/2 overnight, pushing above the 100-day moving average and the psychological $13.00 mark. Next strong resistance is the 200-day average at $13.34 1/2 and the April high at $13.38 3/4. The contract is short-term overbought, so some profit-taking ahead of the long weekend wouldn’t be surprising, though the downside should be limited unless forecasts shift.
WHEAT: July SRW futures reached as high as $7.67 1/2 overnight and are trading sharply above the short-term and intermediate moving averages. Next resistance is the 100-day moving average near $6.87 1/2.
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed tone as traders wait on active cash cattle trade to develop. Cash cattle trade so far this week occurred at lower prices, though not enough traded for a true test. Packers are trying to buy cattle at lower prices after the recent string of record highs, but feedlots aren’t showing much interest in moving cattle at these levels. The average cash price will likely be lower this week, but movement is also expected to be light. Wholesale Choice beef prices continue to surge, rising another $3.01 on Thursday. With futures trading sharply below the cash market, today’s price action will be key to the near-term outlook. A technical breakdown would give bears the upper hand despite strong fundamentals. But if buyers show up, it would suggest this week’s price action was purely corrective in nature.
HOGS: Lean hog futures are expected to open with a mostly firmer tone amid support from firming cash fundamentals. But it wouldn’t surprise us to see some selling ahead of the upcoming three-day weekend. The pork cutout value firmed another $1.16 on Thursday to $90.89, signaling an increase in retailer demand given hefty wholesale beef prices. The CME lean hog index also continues to strengthen, rising another 62 cents to $86.87 (as of June 14). After Thursday’s losses, the premium July hogs hold to today’s cash quote stood at $5.055.
