Ahead of the Open | August 11, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 2 to 4 cents higher.
Wheat: SRW 1 to 3 cents lower; HRW and HRS steady to 2 cents higher.
GENERAL COMMENTS: Price action in the grain and soy markets was quiet overnight. We expect that to continue during daytime trade ahead of USDA’s August crop reports later this morning. Outside markets are mixed with crude oil and the U.S. dollar both modestly higher.
USDA reported daily corn sales of 143,637 MT to Mexico for 2023-24.
USDA’s initial survey-based corn and soybean crop estimates in USDA’s Crop Production Report at 11 a.m. CT will be the highlight. They will be based mostly on farmer surveys and satellite imagery. The first cotton crop estimate will include objective yield data from southern Texas. Any changes to the U.S. wheat crop estimates this month are typically minor. USDA will also update its U.S. and global balance sheets. Click here to view the pre-report estimates.
World Weather Inc. says the Corn Belt, Delta and Southeast should continue to see favorable weather for crop development over the next week. The second week of the outlook is likely to see a little less frequent and significant rainfall, while temperatures will rise. Texas will continue hot and dry through the next 10 days and perhaps longer.
Floods have damaged corn and rice crops in China’s key northern grain belt, with more rains expected from Khanun, though World Weather doesn’t expect serious damage from the latest storm. Initial estimates show 4 MMT to 5 MMT of corn, or about 2% of the country’s output, have been affected by the floods, two trade sources told Reuters. An analyst at Beijing Orient Agribusiness Consultant told Reuters damage from the storms may reduce rice production by 3% to 5%. China’s ag ministry left its corn and soybean production estimates at 282.34 MMT and 21.46 MMT, respectively. Any reductions due to recent flooding and adverse weather will likely show up in next month’s report.
A vessel carrying about 30,000 MT of Polish wheat is being prevented from unloading at the port of Houston due to contamination with corn, people familiar with the situation told Bloomberg News.
CORN: December corn futures were extremely quiet overnight, trading within a 2-cent range. The contract continues to consolidate around the recent lows. If there’s a breakout from the short-term range extending from $4.89 1/4 to $5.06 1/2 in reaction to USDA’s report data, it would likely set the near-term price tone.
SOYBEANS: November soybean futures held in an 8-cent trading range overnight as traders awaited USDA’s August crop reports. The contract closed above $13.15 on Thursday, negating the downside breakout from the bear flag formation on Monday. Near-term trading boundaries extend from $12.82 1/4 to $13.54.
WHEAT: December SRW futures traded in a 7-cent range overnight as the contract continued to consolidate around the recent lows. Near-term trading boundaries extend from $6.54 1/4 to $6.87 1/4.
CATTLE: Choppy/higher.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone as traders anticipate steady/firmer cash cattle prices, though negotiations may extend into this afternoon. Limited cash cattle trade was reported through Thursday as packers remained committed to not raising cash cattle bids above last week’s levels and feedlots held out for higher prices. Unless either side budges in cash negotiations, this is setting up to be a light week of trade. Wholesale beef prices fell $1.49 for Choice boxes and 34 cents for Select on Thursday, while movement totaled 107 loads.
HOGS: Lean hog futures are expected to open under pressure on followthrough selling after additional sharp losses and a technical breakdown in deferred contracts yesterday. Selling in August hogs may be limited. The CME lean hog index is down another 43 cents. While the index has only dropped $2.09 since the July 28 peak, this marks the eighth decline in the last 10 days. August hog futures, which expire on Monday and will be cash settled on Wednesday, finished Thursday at a $2.185 discount to today’s cash quote, signaling traders expect the pullback to continue. October hogs held over a $23.50 discount, while December hogs were more than $30.00 below the cash index. The pork cutout value firmed $3.89 on Thursday, fueled by an $18.84 surge in primal belly prices.
