Ahead of the Open | August 15, 2023
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 4 to 8 cents lower.
Wheat: SRW 5 to 10 cents lower, HRW and HRS 2 to 5 cents lower.
GENERAL COMMENTS: Corn and soybeans were pressured overnight by USDA’s bigger-than-expected increases to crop condition ratings. Wheat faced followthrough selling amid a lack of supportive news. Outside markets are mixed, with crude oil around $1.00 lower and the U.S. dollar index more than 100 points lower this morning.
USDA rated 59% of the corn crop as “good” to “excellent,” a two-percentage-point increase from last week. The “poor” to “very poor” rating declined one point to 13%. USDA rated 59% of the soybean crop as “good” to “excellent,” up five points from last week. The portion of crop rated “poor” to “very poor” dropped two points to 12%. On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 3.9 points to 352.5 and was now 3.7 points (1.1%) above last year at this time. The soybean crop jumped 9.2 points to 349.2, which was 0.1 point better than last year on this date.
Crop consultant Dr. Michael Cordonnier raised his corn and soybean yield and production estimates amid recent favorable weather and improved crop conditions. Cordonnier raised his corn yield 1 bu. to 175 bu. per acre, increasing his production estimate to 15.1 billion bushels. Cordonnier raised his soybean yield 0.5 bu. to 51 bu. per acre and he now forecasts the crop at 4.21 billion bushels. He has a neutral to slightly higher bias toward both crops, noting yields and acreage could increase a little for both crops.
USDA rated 42% of the U.S. spring wheat crop as “good” to “excellent,” up one point from the previous week. The portion of crop rated “poor” to “very poor” held at 20%. On our weighted CCI, the spring wheat crop slipped 0.9 point to 320.7, which was 47.7 points (12.9%) below last year.
A heat wave will impact the Plains and western Corn Belt this weekend through the early to middle part of next week where extremes of 100 to 110 are likely in the Plains and 95 to 104 in the western Corn Belt. Dry weather is expected in the Plains and Midwest from the second half of this week through the first half of next week. World Weather Inc. says the high pressure ridge will shift back to the southwest from the Midwest during the second half of next week at which time cooling and “some” rain will begin again, especially in the northeastern Midwest.
Analysts expect members of the National Oilseed Processors Association (NOPA) to report they crushed 171.3 million bu. of soybeans in July. If realized, that would be up 3.8% from June and 0.7% above last year. It would also be the second largest July crush on record behind 2020.
CORN: December corn futures traded lower overnight but didn’t violate Monday’s low at $4.81, which marked an exact double-bottom with the July low. Violation of that level would open the downside to $4.75 to $4.62 range. Near-term resistance is heavily layered in the $4.85 to $5.07 area.
SOYBEANS: November soybean futures continue to chop within the broad range from $12.82 1/4 to $13.54 and are currently right in the middle. The eventual breakout from that range will likely trigger the next trending move.
WHEAT: December SRW futures violated the July low on Monday and faced followthrough selling overnight while holding above Monday’s low at $6.31 3/4. That will be initial support, though it appears the contract is headed for a test of the May low at $6.08 1/4. Near-term resistance is heavily layered from $6.50 to $6.87.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone after finishing low-range on Monday. Cash cattle averaged $185.88 last week, down 82 cents, which was lower than expected and pressured futures on Monday. Traders expect lengthy cash cattle negotiations, which could cause futures to drift lower. But given their big discounts to the cash market, we don’t anticipate heavy selling pressure. Wholesale beef prices posted strong gains on Monday, with Choice up $2.89 and Select $3.22 higher. Packers are trying to meticulously control tight market-ready supplies by limiting kills and their need for cattle until wholesale prices improve enough to strengthen margins.
HOGS: Lean hog futures are expected to open with a mostly weaker tone after a poor close on Monday. While October hogs take over lead-month status at a steep discount to the cash index, traders are showing no signs of letting up amid the seasonal pullback. The CME lean hog index is down another 49 cents to $102.57 (as of Aug. 11). October hogs finished $23.42 below that level on Monday. The pork cutout value was unable to sustain strong morning gains yesterday and finished $1.00 lower for the day.
