Ahead of the Open | July 27, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 5 to 10 cents higher.
Wheat: SRW steady to 2 cents higher; HRW and HRS 4 to 8 cents higher.
GENERAL COMMENTS: Grain and soy futures posted two-sided trade overnight, though bulls had the slight upper hand. Based on how the overnight session ended, we anticipate a mostly firmer start to the daytime session. Outside markets are sending mixed signals, with crude oil more than $1.00 higher and the U.S. dollar index up more than 150 points.
Rain fell in southern Michigan, northern Indiana and northwestern Ohio, benefiting crops in those areas. Extreme heat and a lack of rainfall will stress crops across most of the country over the next several days. World Weather Inc. says rain during the Aug. 3-9 period should increase in the lower Midwest and eventually in the Delta to offer some relief from recent hot, dry weather. Upper Midwest rainfall may not increase as much during that period, although temperatures should cool a bit.
Russian President Vladimir Putin stated at the Russia-Africa Economic and Humanitarian Forum that his country will not rejoin the Black Sea grain deal. Putin accused Western nations of being the primary beneficiaries of Ukrainian exports while maintaining sanctions on Russia, insisting Moscow would move towards “a fairer system of resource distribution.” He said Russia was prepared to provide 50,000 MT of grain each to Burkina Faso, Zimbabwe, Mali, Somalia, the Central African Republic and Eritrea in the next three to four months, with promises of free shipping.
Ukrainian officials said missiles from a Russian submarine hit port infrastructure in the Odesa region overnight, damaging a cargo terminal and killing a security guard. Meanwhile, Russia’s Federal Security Service (FSB) said it found traces of explosives on board a foreign vessel enroute from Turkey to Russia that had previously entered a Ukrainian port. It was the second such announcement this week involving a foreign ship heading to Russia to pick up grain. FSB said on Monday it had found traces of explosives on another ship travelling from Turkey.
Crop scouts on Day 2 of the Wheat Quality Council’s HRS tour found an average yield of 45.7 bu. per acre in north-central and northwest North Dakota, down from 47.7 bu. in those areas last year but above the five-year average of 38 bu. per acre. On Day 1, the tour’s average yield was 48.1 bu. per acre in southern and east-central North Dakota, down from 48.9 bu. last year but above the five-year average of 40.2 bu. per acre. Scouts will sample fields in northeastern North Dakota today.
USDA reported daily soybean export sales of 256,000 MT to unknown destinations for 2023-24. This followed two daily soybean sales totaling 501,000 MT to unknown destinations for 2023-24 on Wednesday.
Export sales for the week ended July 20:
Corn: Net sales of 314,200 MT for 2022-23, up 33% from the previous week and 15% above the four-week average. Net sales of 335,800 MT for 2023-24. Traders expected sales between 100,000 and 500,000 MT for 2022-23 and 200,000 and 500,000 MT for 2023-24.
Beans: Net sales of 198,500 MT for 2022-23 rose 73% from the four-week average. Net sales of 544,600 MT for 2023-24. Traders expected sales between 50,000 and 400,000 MT for 2022-23 and 300,000 and 800,000 MT for 2023-24.
Wheat: Net sales of 233,200 MT for 2023-24, up 37% from the previous week but down 17% from the four-week average. Traders expected sales between 150,000 and 400,000 MT for 2023-24.
CORN: December corn futures pivoted around Wednesday’s closing level overnight. Near-term trading boundaries have been established from $5.31 1/4 to $5.72 1/4. That wide range gives both bulls and bears room to maneuver as they await the next market-moving news.
SOYBEANS: November soybean futures remain in the steep uptrend from the May low but have paused around the recent highs. Near-term resistance is Monday’s high at $14.35, followed by the contract high at $14.48 1/4. Near-term support is in the $14.20 to $14.00 area.
WHEAT: December SRW futures pivoted around yesterday’s closing level overnight while holding within Wednesday’s trading range. Near-term trading boundaries extend from $7.14 to $7.96 1/4.
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed tone as traders wait on active cash cattle trade to develop, though we wouldn’t be surprised to see a mostly firmer tone. Packers have shown little willingness to raise cash cattle bids given negative margins and feedlots are in no hurry to move animals at lower prices. So far, only light cash cattle trade has been reported at higher prices. We don’t expect trade to turn active until packers get more aggressive with cash bids. Choice boxed beef prices fell 88 cents on Wednesday, while Select firmed $2.26. USDA reported net beef sales of 21,400 MT for 2023, up 2% from the previous week and 43% above the four-week average.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from strengthening cash fundamentals. The CME lean hog index is up another 53 cents to $105.79 (as of July 25), extending the prolonged seasonal rally. August lean hog futures finished Wednesday’s session $4.14 below today’s cash quote. While the cash market is showing no signs the seasonal rally is running out of steam, traders are likely to keep front-month futures well below the cash index. The pork cutout value dropped 31 cents on Wednesday as declines in loins, butts, picnics and ribs offset strength in hams and bellies. USDA reported net pork sales of 25,500 MT for 2023, up 33% from the previous week and 6% above the four-week average.
