Ahead of the Open | June 21, 2023
GRAIN CALLS
Corn: 12 to 16 cents higher.
Soybeans: 12 to 20 cents higher.
Wheat: 10 to 15 cents higher.
GENERAL COMMENTS: Corn, soybean and spring wheat futures traded sharply higher overnight on support from sharper-than-expected cuts to USDA’s crop condition ratings. Winter wheat actively followed to the upside. Soyoil futures traded sharply lower overnight on reports of EPA’s plans for biodiesel mandates in 2023-2025. Outside markets are quiet this morning, with crude oil and the U.S. dollar index both trading just above unchanged.
USDA cut its corn and soybean crop ratings more than expected to 55% and 54% “good” to “excellent,” respectively. On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop plunged 14.4 points to 346.5 while the soybean crop fell 10.6 points to 339.9. The corn CCI rating fell in 16 of the top 18 production states, led by a nearly 4-point drop in Illinois and just over a 3-point decline in Iowa. Illinois and Iowa also led the soybean CCI rating decline. CCI ratings are now 29.7 points (7.9%) below year-ago for corn and 26.1 points (7.1%) below for soybeans.
Conditions will remain mostly dry and warm over the heart of the Corn Belt as moisture from the Gulf of Mexico will not move into the central U.S. during the next 10 days, according to World Weather Inc. Some areas will receive rains during the weekend and early next week, with another wave of rains expected late next week. But amounts and coverage levels are likely to be limited.
USDA’s spring wheat crop condition rating also dropped more than anticipated to 51% “good” to “excellent.” On our weighted CCI, the spring wheat CCI rating plummeted 15.9 points to 340.7 and is now 23.5 points (6.4%) below year-ago for this date.
Expectations are that EPA will officially announce Renewable Fuel Standard mandates for 2023, 2024 and 2025 sometime today. EPA reportedly plans to boost overall biofuel blending levels, but the finalized volumes include just 15 billion gallons of conventional biofuels like corn-based ethanol in all three years, plus a 250-million-gallon supplemental amount for 2023, Reuters reported. Bloomberg reports EPA in 2023 will require the use of 2.82 billion gallons of biomass-based diesel, generally made from soybean and canola oil — just a 2.2% increase over the 2.76 billion gallons mandated last year. For 2024 and 2025, the quotas are being set at 3.04 billion and 3.35 billion gallons, respectively.
SovEcon cut its Russian wheat crop forecast by 1.2 MMT to 86.8 MMT due to worsening crop conditions for spring wheat in the main growing regions – Siberia, the Volga Valley and the Urals.
CORN: December corn futures reached the highest level overnight since mid-November at $6.17 1/4. Next resistance is in the $6.30 to $6.37 area. Previous resistance at $6.06 is support, followed by the psychological $6.00 level.
SOYBEANS: November soybean futures traded sharply higher overnight but failed to push above Tuesday’s high at $13.64 3/4. That level will serve as initial resistance, followed by the March high at $13.86 1/2. Near-term support is at $13.38 3/4 and $13.30 1/4.
WHEAT: July SRW futures gapped above the psychological $7.00 mark overnight. Near-term resistance is the April 18 high at $7.17 1/4, followed by the March high at $7.35 1/4. Near-term support is at $7.00 and then the 5-day moving average near $6.82 1/2.
CATTLE: Lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open under pressure after sharp losses and low-range closes on Tuesday. There’s risk of technical-based selling as futures are signaling a potential downside breakout below near-term support. Seller interest could be limited by the steep discount futures hold to the cash market, though cash cattle are expected to trade lower this week after falling $3.83 last week. Wholesale beef prices also fell on Tuesday, with Choice down $3.23 and Select $2.83 lower, extending Monday’s declines. Seasonally, cash cattle and boxed beef prices are likely to weaken into July.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from the seasonally rising cash market. The CME lean hog index is up another 54 cents to $88.75 (as of June 19). The pork cutout value fell $1.44 on Tuesday, ending a five-day string of gains, but remains in the seasonal uptrend from the April lows. While cash fundamentals are expected to continue higher near-term, the premium futures hold to the cash index could limit buyer interest.
