Ahead of the Open | August 8, 2023
GRAIN CALLS
Corn: 2 to 5 cents lower.
Soybeans: 12 to 20 cents lower.
Wheat: SRW 4 to 8 cents lower; HRW 2 to 5 cents lower; HRS 1 to 3 cents lower.
GENERAL COMMENTS: Corn and soybeans faced followthrough selling overnight, while wheat futures pulled back from Monday’s gains. Weather remains generally favorable for corn and soybeans, while Chinese trade data was bearish. Outside markets are price-negative with crude oil around $1.50 lower and the U.S. dollar index is about 650 points higher.
USDA rated 57% of the corn crop as “good” to “excellent,” up two percentage points from the previous week. The portion of crop rated “poor” to “very poor” decreased one point to 14%. USDA rated 54% of the soybean crop as “good” to “excellent,” an increase of two points from last week. The amount of crop rated “poor” to “very poor” declined one point to 14%. On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the corn crop improved 4.4 points to 348.7, which was only 3.3 points (0.9%) below last year at this time. The soybean crop improved 4.3 points to 340.1, though still 11.1 points (3.2%) below last year. Illinois led gains in both corn and soybeans, rising 2.8 points and 3.8 points, respectively.
Crop consultant Dr. Michael Cordonnier kept his corn and soybean yield estimates at 174 bu. and 50.5 bu. per acre, respectively, but he now has a neutral to higher bias toward both crops as recent rains and moderate temps are favorable for crop development. Cordonnier estimates production at 15.01 billion bu. for corn and 4.17 billion bu. for soybeans.
USDA rated 41% of the U.S. spring wheat crop as “good” to “excellent,” down one point from the previous week. The amount of crop rated “poor” to “very poor” increased four points to 20%. The spring wheat CCI rating fell another 5.2 points to 321.6, which was 46.2 points (12.6%) below year-ago. Top producer North Dakota accounted for 2.6 points of the decline.
World Weather says conditions will remain mostly favorable over the next week to 10 days across most U.S. crop regions, though some northwestern areas will remain dry. Forecasts signal temps will turn warmer during the second week of the outlook, while rains will be less frequent and not as heavy.
China imported 9.73 MMT of soybeans in July, down 5.3% from June but 23.4% more than last year. Through the first seven months of this year, China imported 62.3 MMT of soybeans, up 15.0% from the same period last year.
China’s overall imports dropped 12.4% from last year to $201.16 billion in July, the steepest decline since January amid weak domestic demand. Exports fell 14.5% to $281.76 billion, the steepest drop since February 2020 amid slowing global demand.
CORN: December corn futures held within Monday’s trading range overnight, also staying within the short-term consolidation range. Near-term support extends from Monday’s low at $4.89 1/4 to the July low at $4.81. Near-term resistance is the $5.00 to $5.10 range.
SOYBEANS: November soybean futures posted a downside breakout from the bear flag formation on Monday and showed active followthrough selling overnight. The bearish breakout projects the contract toward $12.00, though there is support in the $12.56 to $12.47 range. Near-term resistance is in the $13.00 to $13.15 range.
WHEAT: December SRW futures posted an inside day down overnight on a correction to Monday’s gains. We doubt wheat will be able to divorce itself from the other markets on a sustained basis. Near-term support is at last week’s low at $6.54 1/4. Near-term resistance start at Monday’s high of $6.87 1/4.
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mixed tone this morning as traders gear up for what’s likely to be another week of lengthy cash cattle negotiations. The average cash cattle price firmed $1.89 to $186.70 last week, the second highest ever behind the record of $188.75 for the week ended June 9. Packers bought a stronger-than-expected 83,000 head amid the higher cash prices, which along with slowing slaughter rates, will likely encourage them to drag out cash negotiations as long as possible in hopes feedlots will accept steady to lower prices. Wholesale beef prices declined 30 cents for Choice boxes and $1.47 for Select on Monday.
HOGS: Lean hog futures are expected to open with a mixed tone. The CME lean hog index is down 43 cents, marking the biggest daily decline since what appears to be the seasonal peak was posted and the fifth decline in the last seven days. But hog futures posted gains on Monday, suggesting traders may look to further narrow the hefty discount contracts hold to the cash index. The pork cutout value firmed $1.62 on Monday.
