Ahead of the Open | August 29, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 8 to 12 cents lower.
Wheat: SRW wheat 4 to 8 cents lower; HRW 8 to 12 cents lower; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Corn, soybean and winter wheat futures faced price pressure overnight, though corn finished near session highs. Spring wheat favored the upside at the end of the overnight session. We expect mostly weaker trade to start the daytime session, with soybeans and meal leading declines, though there was fresh demand news for both markets. Outside markets are sending mixed signals for grains with crude oil and the U.S. dollar index both firmer.
USDA reported daily sales of 246,100 MT of soybeans and 105,000 MT of soymeal – both to unknown destinations for 2023-24.
USDA rated 56% of the corn crop as “good” to “excellent,” down two percentage points from the previous week. The amount of crop rated “poor” to “very poor” increased two points to 17%. USDA rated 58% of the soybean crop as “good” to “excellent,” down one point from the previous week. The amount of crop rated “poor” to “very poor” increased one point to 14%. The corn and soybean ratings declines were less than anticipated.
On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 5.4 points to 350.1, which was still 2.6 points (0.8%) above last year at this time. The soybean crop fell 4.9 points to 344.0, which was 1.8 points (0.5%) below last year at the end of August. Iowa and Nebraska led the CCI declines for both corn and soybeans, while crops in Illinois improved.
Crop consultant Dr. Michael Cordonnier cut his corn and soybean yields, noting impacts from last week’s extreme heat and a “problematic” forecast. Cordonnier lowered his corn yield by 2 bu. per acre to 173 bu. per acre, but raised harvested acreage by 500,000 acres, resulting in a crop forecast of 15.01 billion bushels. Cordonnier reduced his soybean yield by 1 bu. to 50 bu. per acre and left harvested acres unchanged, resulting in a crop estimate of 4.13 billion bushels.
World Weather Inc. says dryness will continue in the Corn Belt, Plains and northern Delta for at least a week and probably 10 days, although some rain may briefly occur during the middle to latter part of next week. A period of above-normal temps is expected by late this week into early September.
Statistics Canada estimated Canadian all-wheat production at 29.5 MMT, down 14.2% from last year and 900,000 MT lower than the average pre-report estimate. Canadian canola production is estimated at 17.6 MMT, down 6.1% from last year but 200,000 MT above expectations.
CORN: December corn futures are showing signs of a short-term bottom, but the contract will remain rather range-bound unless it can clear this month’s high at $5.07 1/2. Solid support is at this month’s low at $4.73 1/2.
SOYBEANS: November soybean futures gapped lower overnight following Monday’s gap higher. Near-term support extends from the overnight low at $13.92 to the bottom of yesterday’s gap at $13.90 1/2. Resistance extends from yesterday’s high at $14.09 1/2 to the July high at $14.35.
WHEAT: December SRW futures dropped below the Aug. 17 low of $6.12 during overnight trade. Next support is the May spike low at $6.08 1/4, followed by the psychological $6.00 mark. Resistance is heavily layered in the $6.15 to $6.45 area.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after Monday’s price gains. But the market finished well off session highs yesterday and cash cattle negotiations are expected to extend deep into the week. As a result, buyer interest will likely be limited. Wholesale beef prices dropped 86 cents for Choice and 58 cents for Select on Monday, but packer margins are positive. That gives bulls some hope the three-week slide in cash prices will soon come to an end, though packers will likely try to extend the price downturn one more week and then evaluate inventories after the Labor Day holiday weekend.
HOGS: Lean hog futures are expected to open with a mostly firmer tone after strong gains and a high-range finish on Monday. But some selling could creep into the market if initial buyer interest is limited. The CME lean hog index continues to fall, dropping another $1.29 to $93.89. As of Monday’s close, the discount in October lean hog futures had narrowed to $12.04 to today’s cash quote. December hogs held nearly a $20.50 discount. The pork cutout value firmed $2.63 on Monday, driven by a $15.07 jump in primal belly prices after last Friday’s sharp drop.
