Ahead of the Open | July 20, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 2 to 4 cents higher.
Wheat: 8 to 15 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat traded on both sides of unchanged during the overnight session but finished with gains. We expect a firmer start to daytime trade, but the overnight session signaled some corrective selling could surface. Volatility is elevated with markets driven by weather and geopolitics. Outside markets aren’t likely to have much influence on grain and soy futures as both crude oil and the U.S. dollar index as modestly firmer this morning.
Heat is expected to build across the Canadian Prairies and Northern Plains this weekend and the first half of next week. Hot temps are expected are also expected to move into the Central Plains and Corn Belt early next week. Dry conditions are expected across much of the northern U.S. along with the heat, while central and southern areas of the Corn Belt are expected to see periodic rains the next 10 days.
Russia attacked Odesa and Mykolaiv on Thursday in a third straight night of air strikes on southern Ukrainian port cities. Moscow issued a new threat against Ukraine-bound vessels, prompting the White House to warn Russia may expand its targeting of Ukrainian grain facilities to include attacks against civilian ships in the Black Sea.
Export sales for the week ended July 13:
Corn: Net sales of 236,800 MT for 2022-23 declined 49% from the previous week but rose 6% from the four-week average. Net sales of 491,600 MT for 2023-24. Traders expected sales of 200,000 to 500,000 MT for 2022-23 and 50,000 to 500,000 MT for 2023-24.
Soybeans: Net sales of 127,000 MT for 2022-23 rose 58% from the previous week but fell 43% from the four-week average. Net sales of 760,300 MT for 2023-24. Traders expected sales of 0 to 300,000 MT for 2022-23 and 150,000 to 700,000 MT for 2023-24.
Wheat: Net sales of 170,700 MT for 2023-24 declined notably from the previous week and fell shy of expectations. Traders expected sales of 200,000 to 500,000 MT for 2023-24.
CORN: December corn futures traded on both sides of Wednesday’s closing level overnight. Yesterday’s high at $5.63 3/4 is initial resistance, followed by the 200-day moving average at $5.74 1/4. Near-term support starts at the 100-day average around $5.43 1/2.
SOYBEANS: November soybean futures paused overnight after strong gains earlier this week. Wednesday’s high at $14.28 3/4 is near-term resistance, followed by $14.34 1/4, $14.35 and the contract high at $14.48 1/4. Initial support is at previous resistance of $13.91 3/4.
WHEAT: December SRW futures pushed above Wednesday’s high and the 200-day moving average at $7.59 overnight. The overnight high at $7.68 3/4 is near-term resistance, followed by the June high at $7.84 1/4. Near-term support starts at Wednesday’s high of $7.50 1/2.
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone. We expect price action to be similar to the past two days – choppy with an upside bias – as traders await active cash cattle trade and prepare for Friday afternoon’s Cattle on Feed and Cattle Inventory Reports from USDA. So far, only a smattering of cash cattle trade has been reported at roughly steady prices. We expect prices to firm again as the northern market should be strong. Choice boxed beef prices fell another $1.09 on Wednesday, while Select dropped 65 cents. Seasonally, a low in wholesale beef prices should come soon and the slowing of slaughter runs by packers to manage tight market-ready supplies should only help that process. But wholesale prices have yet to signal a low has been posted. USDA reported net beef sales of 20,900 MT for 2023, up notably from last week and 60% above the four-week average.
HOGS: Lean hog futures are expected to open with a mixed tone. August hogs should continue to be supported by the discount the contract holds to the rising cash index, while deferred contracts could face some corrective selling. The CME lean hog index is up another 78 cents to $103.30 (as of July 18). Even after strong gains on Wednesday, the August contract still finished $5.375 below today’s cash quote. The pork cutout value slipped 7 cents on Wednesday and movement slowed to 288.4 loads. USDA reported net pork sales of 19,200 MT for 2023, down 22% from last week and 28% below the four-week average.
