Ahead of the Open | August 22, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: Steady to 5 cents higher.
Wheat: 4 to 6 cents higher.
GENERAL COMMENTS: Corn and soybeans saw muted volatility overnight as prices remained relatively flat on the session, while wheat futures saw relative strength. Prices are focused on the weather forecast, which is seen as dry for at least another week and hot until temperatures cool off on Thursday and into the weekend. Outside markets are relatively flat, with front-month crude oil futures down just 36 cents and the U.S. dollar index up around 200 points.
Scouts on the first day of the Pro Farmer Crop Tour found an average corn yield of 157.42 bu. per acre in South Dakota, up from 118.45 bu. per acre last year and the three-year average of 149.71 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 1,013 for South Dakota, up from 871.4 last year but down from the three-year average of 1,039.71.
In Ohio, samples yielded an average corn yield of 183.94 bu. per acre, up from 174.17 bu. per acre in 2022 and up from the three-year average of 175.64 bu. per acre. Soybean pod counts in a 3’x3’ square totaled 1,252.93 for Ohio, up from 1,131.64 in 2022 and above the three-year average of 1,160.9.
Today, scouts on the eastern leg of the Tour will sample routes from Noblesville, Indiana to Bloomington, Illinois, and scouts on the western leg will sample central and southern Nebraska.
USDA rated 58% of the corn “good” to “excellent,” a one percentage point decrease from last week. The “poor” to “very poor” rating increased two points to 15%. USDA rated 59% of the soybean crop as “good” to “excellent,” steady from last week. The “poor” to “very poor” rating increased one point to 13%. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop fell 2.4 points to 350.2 and is now 5.4 points (1.6 %) above last year at this time. The soybean crop fell .3 points to 348.9 and is now 2.4 points (.7%) above last year at this date.
USDA rated 38% of the spring wheat crop as “good” to “excellent,” a four-point drop from the previous week. The portion of the crop rated “poor” to “very poor” rose three percentage points to 23%. On our weighted CCI, the spring wheat crop fell 4.6 points to 316.1, which is 53.6 points (14.5%) below last year
Crop consultant Dr. Michael Cordonnier left his corn and soybean estimates unchanged at 175 bu. per acre and 51 bu. per acre as he waits to see how the weather plays out this week. He maintains a neutral bias going forward, but notes that the forecast of extremely hot and dry weather in the central U.S. is not a good combination for the crops. Cordonnier estimates production at 15.10 billion bu. for corn and 4.21 billion bu. for soybeans.
USDA released daily export sales of 224,000 MT of corn for delivery to Mexico. Of the total, 112,000 MT is for delivery during the 24/25 marketing year and the remaining 112,000 MT is for deliver during the 25/26 marketing year.
CORN: December corn futures saw limited volatility overnight and went into the break flat on the session. Monday’s candle does not bode well for corn bulls and some follow through selling is likely today. Initial resistance starts at $4.88 1/2 and is backed by the key $5.00 level. Support can be expected at $4.80 then last week’s low at $4.73 1/2.
SOYBEANS: November soybean futures saw muted volatility as well with price sticking near Monday’s open. Support can be expected at $13.55 1/2 then $13.45. Bulls are targeting Monday’s high of $13.81, a daily close above that level likely points to a test of $14.00.
WHEAT: December SRW futures traded mostly higher overnight by more downside is likely in store after yesterday’s rejection of 10-day moving average at $6.39 1/2. This will stand as the first spot of meaningful resistance, a daily close above which would indicate a potential interim low is in place, though that is unlikely. Bears are targeting last Thursday’s low of $5.86 1/4 before the may low at $5.73 1/4.
CATTLE: Steady/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after continued buying above initial resistance on Monday. An uptrend remains on the daily bar chart in October futures and the fundamentals remain bullish as well. Cash cattle averaged $185.04 last week, down 84 cents from the prior week. Wholesale prices remain strong as well, despite Choice cutout falling 55 cents to $315.56 and Select falling $1.03 to $287.33 on Monday. Heavy selling pressure is unlikely to come into the market, but back-to-back weeks of weakness in the cash market does not bode well for bulls, as time is seemingly running out for a run at the June highs.
HOGS: Lean hog futures are expected to open with a mostly weaker tone after Monday’s reversal from steady gains on Friday. Price remains in a downtrend from the August 1 high and technical will likely continue selling pressure despite the steep discount to the cash index that futures maintain. The cash index is seen as falling 80 cents to $98.81 in the August 18 quote calculated using USDA data, the lowest level in over a month. The market is likely pricing in reduced consumer demand as the grilling and BLT season winds down. Pork cutout values slid on Monday as well, falling 96 cents to $105.21 as bearish seasonals take hold of the market.
