Ahead of the Open | July 14, 2023
GRAIN CALLS
Corn: 5 to 10 cents higher.
Soybeans: 5 to 10 cents higher.
Wheat: SRW and HRW 10 to 15 cents higher; HRS 15 to 20 cents higher.
GENERAL COMMENTS: Corn, soybean and wheat futures traded higher overnight amid uncertainty with the Black Sea grain deal and forecasts calling for building heat in some areas of the Corn Belt during the final week of July. While futures backed off their overnight highs late in the session, signs point toward a solidly firmer open this morning. But price action will be influenced by the midday weather model runs. Outside markets are relatively quiet with the U.S. dollar index around 100 points higher and crude oil futures chopping around unchanged.
Forecasts continue to call for rain chances across the lower two-thirds of the Corn Belt, along with the Delta and Southeast over the next 10 days. However, World Weather Inc. says warmer temps in the second week of the outlook will increase moisture needs in the Corn Belt. The Northern Plains and northern one-third of the Corn Belt will be drier than normal, adding to crop stress in the driest areas.
Turkish President Tayyip Erdogan said today the Black Sea grain deal will hopefully be extended beyond the July 17 deadline as the result of efforts by the United Nations and his country. The European Commission is helping the United Nations and Turkey try to extend the grain deal and is open to “explore all solutions,” as we reported in Thursday’s Evening Report.
CORN: December corn futures posted a potential upside breakout from the short-term consolidation range overnight. Whether that’s maintained into the close will be key as there was a failed downside breakout from the range earlier this week. The eventual breakout will likely determine the next trending move.
SOYBEANS: November soybean futures cleared resistance at $13.78 overnight, making the July 3 high at $13.91 3/4 bulls’ next upside target. Above that, bulls would target the psychological $14.00 mark. The 5-day moving average near $13.57 is initial support.
WHEAT: December SRW futures pushed above the 5-, 10-, 40- and 50-day moving averages overnight. Next resistance is at the 20- and 100-day averages near $6.97 and then the psychological $7.00 mark. Near-term support starts around $6.66.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after Thursday’s high-range close, which suggested the corrective pullback from Wednesday’s contract high was completed. But even with big discounts to the cash market, we doubt buyers will be aggressive ahead of the weekend as they wait on active cash cattle trade to develop. The close well off session lows in live cattle futures on Thursday may be enough to swing momentum back in feedlots’ favor in this week’s extended cash cattle negotiations. Cash trade so far this week has been at mostly steady prices, though volume was light and the range of prices was wide. Wholesale beef prices continued to fall with another $4.07 drop in Choice and 92 cent decline in Select yesterday, though movement stayed strong at 149 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 is up another 93 cents, pushing it above $100.00 for the first time since early last September. While the cash index has rallied more than $29.00 from the April low, it is still $13.00 below last year at this time and nearly $22.00 below the August 2022 peak. July lean hog futures finished yesterday at a $2.06 premium to today’s cash quote, while the August contract held a $3.79 discount. The pork cutout value firmed 24 cents on Thursday.
