Ahead of the Open | July 13, 2023
GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 15 to 25 cents higher.
Wheat: SRW and HRW steady to 2 cents higher; HRS 3 to 6 cents higher.
GENERAL COMMENTS: Soybeans posted strong corrective gains overnight, which supported mild buying in corn. Wheat futures favored the upside in choppy trade. The U.S. dollar index is around 250 points lower this morning, which may add a little support to grain and soy futures.
Weather forecasts are about the same as they have been, calling for multiple rain chances and seasonal temps across the central and southern Corn Belt, Delta and Southeast over the next 10 days to two weeks. Rains will be less frequent and lower volumes across the Northern Plains and upper Corn Belt.
As of July 11, the U.S. Drought Monitor showed 49% of the U.S. was covered by abnormal dryness/drought, down three percentage point from the previous week. Drought also eased a little across corn and soybean areas. USDA estimated drought (D1 or higher) covered 64% of corn production areas and 57% of soybeans, both down three points from the previous week. Drought expanded in spring wheat areas, with 25% now covered (up six points).
Export sales for the week ended July 6:
Corn: Net sales of 468,400 MT for 2022-23 jumped 86% from the previous week and were up notably from the four-week average. Net sales totaled 470,800 MT for 2023-24. Traders expected sales of 50,000 to 400,000 MT for both 2022-23 and 2023-24.
Soybeans: Net sales of 80,600 MT for 2022-23 fell 57% from the previous week and 76% from the four-week average. Net sales totaled 209,200 MT for 2023-24. Traders expected sales of 0 to 300,000 MT for 2022-23 and 100,000 to 600,000 MT for 2023-24.
Wheat: Net sales of 395,700 MT for 2023-24 decreased slightly from the previous week. Traders expected sales of 50,000 to 550,000 MT for 2023-24.
USDA reported daily soybean sales of 315,704 MT to Mexico for 2023-24.
Brazil raised its corn production estimate 2 MMT to a record 127.7 MMT, due mostly to a bigger safrinha crop forecast. Despite the supply increase, Conab left its 2022-23 Brazilian corn export forecast at 48 MMT. Conab trimmed its Brazilian soybean crop estimate by 1.2 MMT to 154.5 MMT. It left the 2022-23 export forecast at 95.6 MMT.
CORN: December corn futures posted a downside breakout from the bear flag formation on Wednesday but rebounded amid corrective buying overnight. The overnight low at $4.81 is key near-term support. A drop below that level would likely attract fresh chart-based selling. Near-term resistance extends from $4.90 3/4 to $5.09 1/2.
SOYBEANS: November soybean futures rebounded overnight from Wednesday’s bearish reversal after bouncing from the 20-day moving average. Near-term support extends from yesterday’s low at $13.25 to $13.15 1/2, followed by the psychological $13.00 mark. Near-term resistance is at $13.78 and this month’s high at $13.91 3/4.
WHEAT: December SRW futures broke down technically on Wednesday. The overnight low at $6.41 1/2 is initial support. Previous support at $6.57 1/4 is near-term resistance.
CATTLE: Lower.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open under pressure after posting sharp losses and a low-range close on Wednesday following fresh contract highs earlier in the day. While we expect followthrough corrective selling initially this morning, it wouldn’t surprise us if buyers show up under the market given strong cash fundamentals and the discount futures hold to the cash market. Momentum was favoring feedlots in this week’s cash cattle negotiations until yesterday’s late selloff in futures. While most cash sources still expect steady/slightly firmer cash cattle trade, active followthrough selling in futures could cause packers to be more conservative with bids. Choice boxed beef prices continued to slide, dropping another $1.14 on Wednesday, though Select firmed 86 cents. Movement was strong again at 165 loads. The pickup in retailer buying despite a seasonally slow time of year for beef suggests prices may be getting low enough. USDA reported net beef sales of 9,900 MT for 2023, down 42% from the previous week and 28% below the four-week average.
HOGS: Lean hog futures are expected to open with a mixed tone this morning. While the cash market remains strong, traders pumped the brakes a little on Wednesday. The CME lean hog index is up another 70 cents to $99.36 (as of July 11). As of Wednesday’s close, July hogs had a $1.815 premium to today’s cash quote, while the August contract was at a $4.01 discount. The pork cutout value dropped $1.33 on Wednesday amid notable losses in primal prices for bellies, ribs, butts and picnics. USDA reported net pork sales of 24,500 MT for 2023, down 6% from the previous week and 9% below the four-week average.
