Ahead of the Open | August 17, 2023
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: Steady to 2 cents higher.
Wheat: SRW 5 to 10 cents lower; HRW 4 to 8 cents lower; HRS 2 to 4 cents lower.
GENERAL COMMENTS: Soybeans favored the upside overnight, while corn and wheat traded lower. Weekly export sales were about as expected, though new-crop soybean sales topped expectations. Weather and outside markets should be price-supportive, though there was no indication overnight of active buyer interest.
Forecasts continue to call for extreme heat in the Plains and Corn Belt from this weekend through next week. Rainfall will also be limited during this period, which will stress crops, especially in the driest areas.
The U.S. is preparing to escalate its complaint that Mexico’s ban on genetically modified (GM) corn violates the U.S.-Mexico-Canada Agreement (USMCA). The office of the U.S. Trade Representative plans to request the formation of a dispute resolution panel under USMCA, Bloomberg reported.
India is in talks with Russia to import wheat via government-to-government deals at a discount to surging global prices. The last time India imported a significant amount of wheat was in 2017.
Export sales for the week ended Aug. 10:
Corn: Net sales of 233,500 MT for 2022-23, up 55% from the previous week and 16% from the four-week average. Net sales of 704,700 MT for 2023-24. Traders expected sales of 0 to 250,000 MT for 2022-23 and 500,000 MT to 1.0 MMT for 2023-24.
Soybeans: Net sales of 93,600 MT for 2022-23, down 77% from the previous week and 42% from the prior 4-week average. Net sales of 1.408 MMT for 2023-24 were primarily for China (940,000 MT) and unknown destinations (258,000 MT). Traders expected sales of 0 to 400,000 MT for 2022-23 and 550,000 to 1.3 MMT for 2023-24.
Wheat: Net sales of 359,500 MT for 2023-24, down 37% from the previous week but up 3% from the four-week average. Traders expected sales of 200,000 to 525,000 MT for 2023-24.
CORN: December corn futures closed above previous support at $4.81 on Wednesday but failed to find buyer interest above that level overnight. To signal a low, bulls would need consecutive closes above $5.00. Support extends from Wednesday’s low at $4.73 1/2 to $4.62.
SOYBEANS: November soybean futures traded higher for much of the overnight session. The contract remains near the middle of the broad near-term range from $12.82 1/4 to $13.54, with traders showing no willingness to even attempt a breakout in either direction.
WHEAT: December SRW futures broke down further technically overnight and appear headed for a test of the May low at $6.08 1/4. Overhead resistance is heavily layered, starting at $6.41 1/2.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone after another low-range close on Wednesday. Brief pushes to the upside have been met with mild seller interest this week, despite big discounts futures hold to the cash market. So far, only light cash cattle trade has been reported at around $1.00 lower prices in the Southern Plains. Negotiations have been quiet in the northern market, where supplies are tighter. Wholesale beef prices posted strong gains for a third consecutive day, rising $1.73 for Choice and $1.74 for Select on Wednesday. Beef packer margins are improving amid the rising wholesale prices but remain in the red. Cash sources signal packers will be reluctant to actively raise cash bids until their margins turn positive. USDA reported net beef sales of 15,100 MT for 2023, up 2% from the previous week, but down 13% from the four-week average.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid pressure from weakening cash fundamentals. While futures are trading at wide discounts to the cash index, traders are showing no signs they intend to let the market correct. The CME lean hog index is down another 90 cents, extending its seasonal decline since the end of July. The pork cutout value fell $1.36 on Wednesday as all cuts except butts weakened. Lean hog futures are short-term oversold, though that’s not likely to trigger a corrective rebound on its own given the continued seasonal decline in cash fundamentals. USDA reported net pork sales of 28,700 MT for 2023, up 29% from the previous week and 36% above the four-week average.
