Ahead of the Open | July 19, 2023
GRAIN CALLS
Corn: 20 to 25 cents higher.
Soybeans: 20 to 25 cents higher.
Wheat: Winter wheat 20 to 30 cents higher; spring wheat 12 to 18 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat sharply extended Tuesday’s gains during the overnight session. Today’s price action will be all about uncertainties with the Black Sea grain supply, weather and money flow. Given recent strong gains, some corrective selling could enter the market after the initial wave of buying this morning. Outside markets are mixed, with both crude oil futures and the U.S. dollar index higher.
Russia launched an extensive air attack on the Ukrainian port city of Odesa for a second night in row. Ukrainian Ag Minister Mykola Solsky said a “considerable” amount of grain export infrastructure at a Chornomorsk port had been damaged by the attack.
Russia said the United Nations had three months to implement the terms of its portion of the previously agreed to grain deal if it wanted Moscow to resume talks about allowing safe Ukrainian grain exports to restart. Russia wants to see “concrete results” with its exports before it would consider restarting the Black Sea grain deal.
Dry conditions are expected across the Northern Plains and northern one-third of the Corn Belt through next week, while temperatures will rise. That will increase crop stress in these areas. Weather models have also removed some of the expected rains over the next 10 days across the southern two-thirds of the Corn Belt and Delta.
CORN: December corn futures sharply extended recent gains overnight, surging above the 100-day moving average. Bulls’ next upside target is the 200-day moving average around $5.74 1/2 and the March high at $5.76 1/4. Near-term support starts at the psychological $5.50 level.
SOYBEANS: November soybean futures surged to the highest level this calendar year during overnight trade. The Dec. 30 high at $14.27 3/4 is next resistance, followed by a range from $14.34 1/4 to the contract high at $14.48 1/4. Near-term support is at previous resistance at $14.02, the psychological $14.00 mark and previous resistance at $13.91 3/4.
WHEAT: December SRW futures blew through the 100-day moving average and Monday’s spike high overnight. Next resistance is at $7.43. Near-term support extends from $7.08 1/4 to $7.00.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after posting contract-high closes (not intra-day contract highs) on Tuesday. If early buyer interest is limited, however, some profit-taking could hit the market as traders await active cash cattle trade and start to prepare for Friday’s Cattle on Feed and Cattle Inventory Reports. Recent cash cattle negotiations have pushed deep into the week, especially in the northern market. With the reports on Friday afternoon, it’s unlikely trade will develop early – unless packers get aggressive with bids. That also seems unlikely as the fall in wholesale beef prices has dropped packer margins deeper into the red.
HOGS: Lean hog futures are expected to open mostly firmer on support from the rising cash index. The CME lean hog index is up another 93 cents, reaching the highest level since the first week of September last year. At $102.53 (as of July 17), the index is up $31.35 from the April low but still more than $13.00 below last year at this time and nearly $20.00 below the August 2022 peak. August hog futures posted strong gains on Tuesday but still finished $6.255 below today’s cash quote. The pork cutout value slipped 3 cents on Tuesday, though movement improved to 331.4 loads.
