Ahead of the Open | June 20, 2023
GRAIN CALLS
Corn: 2 cents lower to 2 cents higher.
Soybeans: 5 cents lower to 5 cents higher.
Wheat: 5 to 10 cents lower.
GENERAL COMMENTS: Corn and soybean futures traded higher early in the overnight session coming out of the extended holiday weekend, but finished mixed amid bull spreading. Wheat faded overnight. With weather the focus and a mixed bag – both during the extended weekend and in the 10-day outlook, price action could be volatile this morning. Outside markets have turned negative for grains with crude oil nearly $1.00 lower and the U.S. dollar index modestly firmer.
Rains fell on areas of the western and southern Corn Belt during the holiday weekend, while eastern portions of the region remained dry. Rain is expected from the Ohio River valley into the Southeast this week. Rains will be scattered and light across other areas of the Corn Belt. Temps are expected to be seasonably warm but not excessively hot. World Weather Inc. says the heart of the Corn Belt are forecast to receive some rains next week, though amounts are currently expected to be light.
Due to persistently dry weather and forecasts for ongoing drought in the Corn Belt, crop consultant Dr. Michael Cordonnier cut his corn yield by 1 bu. to 177 bu. per acre. He now projects the corn crop at 14.77 billion bushels. Cordonnier trimmed his soybean yield by 0.5 bu. to 51 bu. per acre, lowering his production forecast to 4.44 billion bushels.
Recent rains in Brazil will help later developing safrinha corn. As a result, Cordonnier raised his Brazilian corn crop estimate by 1 MMT to 130 MMT. He cut his Argentine soybean crop estimate 1 MMT to 21 MMT, noting double-crop soybean yields were especially disappointing.
Russia expects the Black Sea grain deal to end on July 18, but says there could be fresh talks ahead of that deadline, Russian state news agency RIA reported. Russia’s deputy foreign minister said on Monday that even if the deal ends, the country’s agreement with the United Nations to ease restrictions on its exports will stay in force, RIA reported.
Mexican President Andres Manuel Lopez Obrador said on Monday he would sign an agreement this week with tortilla makers that ensures they only use non-GMO white corn. The agreement will include tariffs on imported white corn to promote the purchase from domestic producers.
CORN: December corn futures gapped higher to start the overnight session but filled the gap and faded to losses. The overnight high at $6.09 is initial resistance, followed by the December high at $6.13 3/4. Near-term support is the 200-day moving average near $5.83 1/2.
SOYBEANS: November soybean futures gapped higher at the start of overnight trade but filled the gap and dropped below the 200-day moving average. Near-term support is in the $13.30 to $13.25 area. The overnight high at $13.64 3/4 is near-term resistance.
WHEAT: July SRW futures traded within last Friday’s range overnight. Last Friday’s high at $6.97 stands at near-term resistance, followed by the psychological $7.00 mark. Near-term support is in the $6.69 to $6.64 area.
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open the week with a mixed tone as traders settle in for what is likely to be extended cash cattle negotiations. Cash cattle prices averaged $184.92 last week, down $3.83 from the previous week and the first decline in a month and a half. Packers will try to get cattle bought at cheaper prices again this week, while feedlots will be hesitant to move cattle at lower prices since they are current on marketings. Choice boxed beef prices fell $2.95 on Monday, while Select dropped 19 cents. Movement was solid at 101 loads.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from firming cash fundamentals. The CME lean hog index continues its methodical seasonal climb, rising another 77 cents to $87.64 (as of June 15). The pork cutout value firmed $3.73 on Monday amid strong gains in all cuts. At $96.06, the pork cutout jumped to the highest level since mid-November of last year. Lean hog futures are rising amid the strengthening cash fundamentals, though the premium in the July contract could limit buyer interest in the lead contract.
