Ahead of the Open | July 5, 2023

Ahead of the Open
Ahead of the Open
(Pro Farmer)

GRAIN CALLS

Corn: 1 to 3 cents lower.

Soybeans: 2 to 5 cents higher.

Wheat: Winter wheat 2 to 4 cents lower; spring wheat 1 to 3 cents higher.

GENERAL COMMENTS: There was no overnight grain trade due to Tuesday’s federal holiday. Grain markets will resume trade at 8:30 a.m. CT. Markets will continue to react to last Friday’s planted acreage data, which was bullish for soybeans and bearish for corn, along with weather, which has improved. Crude oil futures are around $1.50 higher this morning, while the U.S. dollar index is near unchanged.

Rain fell on a large part of the western Corn Belt as well as from central to southeastern Indiana to the southern and eastern halves of Ohio Monday into this morning with some of the driest areas in eastern Kansas and western Missouri benefitting most from the rain. There will be multiple rain chances across the central U.S. into mid-July. World Weather Inc. says rains will be sufficient to support crops across the Central Plains and lower Midwest over the next 10 days, while amounts will be limited for the Northern Plains and upper Midwest.

Recent rainfall and forecasts for more rains into mid-July will ease some of the immediate moisture concerns. As a result, crop consultant Dr. Michael Cordonnier left his corn and soybean yield forecasts at 175 bu. and 50.5 bu. per acre, respectively. He adopted USDA’s acreage estimates from the June 30 Acreage Report. Cordonnier now forecasts production at 15.10 billion bu. for corn and 4.17 billion bu. for soybeans.

On Monday, USDA rated 51% of the corn crop as “good” to “excellent,” up one point from the previous week. The soybean crop dropped one point to 50% “good” to “excellent.” On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 1.8 points to 339.6, though that was still 24.5 points (6.7%) under year-ago. The soybean crop dropped another 1.1 points to 328.5, which was 26.4 points (7.4%) below last year at this time.

USDA cut its spring wheat crop rating to 48% “good” to “excellent,” down two points from the previous week. On our CCI, the spring wheat crop fell another 4.8 points to 333.5, which was 34.9 points (9.5%) lower than last year on this date.
 

CORN: December corn futures spiked the May low during Monday’s session but closed above that level. Monday’s spike low at $4.88 3/4 is initial support, followed by a previous consolidation area from $4.87 1/4 to $4.62 1/2. The psychological $5.00 mark is near-term resistance, followed by previous support at $5.11 1/4. The contract is short-term heavily oversold, though that’s not a good predictor a near-term corrective rebound will happen.

SOYBEANS: November soybean futures failed to find sustained buying above the June high at $13.78 on Monday. That level will serve as initial resistance, followed by Monday’s spike high at $13.91 3/4 and the psychological $14.00 mark. Near-term support is at $13.38 3/4 and $13.30 1/4.

WHEAT: December SRW futures have fallen back into the long-term downtrend. Near-term support is in the $6.50 to $6.33 range. The 5-day moving average at $6.83 1/2 is near-term resistance.

 

LIVESTOCK CALLS

CATTLE: Mixed.

HOGS: Choppy/higher.

CATTLE: Live cattle futures are expected to open with a mixed tone in what’s likely to be light and choppy trade as traders closely monitor cash cattle negotiations. Packers have fresh contract supplies available but are thought to be short-bought on cattle coming out of the holiday following a couple weeks of light purchases. With only three days to wrap up cattle negotiations, packers’ level of activity today should signal whether cash prices will weaken again or break the three-week slide. Wholesale beef prices firmed 62 cents for Choice and 67 cents for Select on Monday. Beef demand typically wanes following the Fourth of July until retailers start purchases for Labor Day.

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 to strengthen seasonally, firming to $94.31 as of June 30. The pork cutout value jumped $5.55 on Monday to $108.00. Summer-month contracts continue to trade at discounts to the cash index, which should be price-supportive, though we expect traders to remain relatively conservative.

 

 

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