Ahead of the Open | July 12, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 10 to 15 cents higher.
Wheat: SRW 1 cent lower to 1 cent higher; HRW 3 to 6 cents higher; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Soybean futures extended this week’s gains ahead of USDA’s reports during the overnight session. Corn followed to the upside, while wheat posted a varied tone. Outside markets are price-supportive this morning, with the U.S. dollar index more than 550 points lower and crude oil futures higher this morning.
USDA reported daily soymeal sales of 105,000 MT to unknown destinations for 2023-24.
USDA’s updated balance sheets in the Supply & Demand Report at 11 a.m. CT will reflect adjustments to old-crop demand forecasts based on June 1 stocks. There will be major changes on the new-crop soybean balance sheet to reflect the sharp drop in planted acreage in the June 30 Acreage Report. An expected cut to the projected corn yield is anticipated to offset the higher planted acreage estimate. USDA will also release its first all-wheat crop estimate, including the initial survey-based forecasts for other spring wheat and durum.
A broad band of rains and storms is moving across the Corn Belt this morning, stretching from central South Dakota and Nebraska to northern Illinois and Indiana. Much of Iowa and the northern half of Illinois will receive some rainfall from this event, though the rains are expected to be lighter and less intense as they move into the far eastern Corn Belt. World Weather Inc. says additional rains are expected across the central and lower Corn Belt, Delta and Southeast over the next week to 10 days. Rains will be more sporadic across the Northern Plains and upper Midwest.
There are no new developments regarding the Black Sea grain deal. Virtually every entity aside from Russia appears to want the deal extended but Moscow is showing no signs it will budge without significant concessions from the United Nations and Western countries.
U.S. consumer inflation eased more than expected in June. That is putting heavy pressure on the U.S. dollar index, which fell to its lowest level since early May.
CORN: December corn futures continue to consolidate around the recent lows. The bear flag remains on the daily chart. A breakout below $4.85 1/2 would confirm the bearish formation and project the contract sharply lower. A close above $5.09 1/2 would negate the formation.
SOYBEANS: November soybean futures remain bullish technically. Near-term resistance stands at last week’s high of $13.91 3/4. Near-term support starts at the 5-day moving average at $13.47.
WHEAT: December SRW futures continue to consolidate above the recent lows. Near-term support is at last week’s low of $6.57 1/4. Near-term resistance is layered from $6.75 to $7.00.
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open higher on followthrough buying after a strong close on Tuesday as futures posted contract highs late in the session. If early buyer interest is limited, however, it wouldn’t surprise us to see some profit-taking. The push higher in futures this week suggests cash cattle will again trade higher, though there has been no activity of note yet. Boxed beef prices dropped another $1.67 for Choice and $2.09 for Select on Tuesday as the seasonal decline extended. Choice beef values are now nearly $31.00 below their mid-June peak. Seasonally, prices are likely to keep sliding until retailers start gearing up for Labor Day features – or prices are deemed to be “cheap enough” to encourage value buying. With Choice beef still well above $300.00, we doubt value buying will surface anytime soon.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from strengthening cash fundamentals. The CME lean hog index is up another 51 cents to $98.66 (as of July 10). July hogs finished Tuesday $2.615 above that level, while the August contract still held a $1.085 discount. The pork cutout value firmed another $4.04 on Tuesday amid a more than $19.00 surge in primal belly prices. But all other cuts except butts finished higher on the day, signaling widespread price strength. With BLT season just around the corner, bellies should continue to lead the seasonal climb in wholesale pork prices.
