Ahead of the Open | August 3, 2023
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 2 to 5 cents higher.
Wheat: Winter wheat 2 cents lower to 2 cents higher; spring wheat 2 to 5 cents higher.
GENERAL COMMENTS: Corn and winter wheat futures struggled to maintain buyer interest late in the overnight session, while soybeans and spring wheat posted modest corrective gains. Aside from new-crop soybean sales, supportive news is lacking. Crude oil futures are mildly firmer an the U.S. dollar index is modestly weaker, but neither market is strong enough to have much influence on grain/soy futures.
Weather models showed few changes for the U.S. outlook overnight. Conditions will be wettest from South Dakota into Kansas and from there east across the lower Midwest into the northern Delta and Southeast during the next 10 days. The upper Midwest may continue to be a little drier than usual.
Commodity brokerage firm StoneX estimates the U.S. corn crop at 15.274 billion bu. on an average yield of 177 bu. per acre. Both the corn yield and production figures would be records. The firm estimates the U.S. soybean crop at 4.173 billion bu. on a yield of 50.5 bu. per acre.
Ukraine is considering the possibility of insuring ships going through the “grain corridor,” news agency Interfax-Ukraine reported, citing Prime Minister Denys Shmyhal.
Ukrainian grain traders union UGA increased its 2023 combined grain and oilseed crop forecast for Ukraine by almost 8 MMT to 76.8 MMT, citing “favorable weather conditions and better-than-expected crop yields.” UGA says production will likely include 26.9 MMT of corn, 20.2 MMT of wheat, 5.2 MMT of barley, 13.9 MMT of sunflower seeds, 3.9 MMT of rapeseed and 4.8 MMT of soybeans. UGA expects Ukraine to export 48 MMT of grains and oilseeds in 2023-24, down from 58 MMT in 2022-23. Wheat exports could total 15 MMT, down from 16.8 MMT in 2022-23, while corn shipments could fall to 22 MMT from 29.5 MMT.
USDA reported daily soybean sales of 134,000 MT to China for 2023-24.
Export sales for the week ended June 27:
Corn: Net sales of 107,500 MT for 2022-23, down 66% from the previous week and four-week average. Net sales of 348,900 MT for 2023-24. Traders expected sales of 150,000 to 500,000 MT for 2022-23 and 200,000 to 700,000 MT for 2023-24.
Soybeans: Net sales of 90,600 MT for 2022-23, down 54% from the previous week and 16% from the four-week average. Net sales of 2.631 MMT for 2023-24, included 1.574 MMT to “unknown destinations” and 859,000 MT to China. Traders expected sales of 50,000 to 400,000 MT for 2022-23 and 1.0 MMT and 2.5 MMT for 2023-24.
Wheat: Net sales of 421,300 MT for 2023-24, up 81% from the previous week and 40% above the four-week average. China was the lead buyer at 138,500 MT. Traders expected sales of 200,000 to 500,000 MT for 2023-24.
CORN: December corn futures pivoted around the $5.00 level overnight. The contract is short-term oversold but it’s going to take a fresh bullish catalyst or help from other markets to fuel even a modest corrective bounce. Near-term support extends from the overnight low of $4.96 1/2 to the July low at $4.81. Near-term resistance is layered from $5.10 to the top of Monday’s gap at $5.25 1/2.
SOYBEANS: November soybean futures posted a modest inside day up in corrective trade overnight. Wednesday’s low at $13.15 is near-term support, followed by the psychological $15.00 mark. Near-term resistance is in the $13.41 to $13.50 range.
WHEAT: December SRW futures pivoted around Wednesday’s low overnight. Near-term support is in the $6.61 to $6.41 range. Near-term resistance is in the $6.80 to $6.87 range.
CATTLE: Mixed.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mixed tone as traders await active cash cattle trade. Much of the broad risk aversion that weighed on markets, including cattle, on Wednesday seems to have subsided. But we doubt that leads to a rush of buyer interest in cattle futures unless packers get aggressive with cash bids. Given they have fresh contract supplies to pull from, it appears packers may be content to buy a small number of cattle in negotiated trade again this week. Wholesale beef prices fell $2.92 for Choice and $2.13 for Select on Wednesday, though movement improved to 134 loads. USDA reported net beef export sales of 12,400 MT for 2023, down 42% from the previous week and 28% from the four-week average.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid further indications a seasonal top is close. But seller interest should be limited by discounts futures hold to the cash index. The CME lean hog index is down another dime today. While losses have been mild, that’s the third decline in four days. The pork cutout dropped $3.63 amid losses in all cuts except loins. USDA reported net pork export sales of 17,800 MT for 2023, down 30% from the previous week and 25% below the four-week average.
