Ahead of the Open | July 28, 2023
GRAIN CALLS
Corn: 10 to 15 cents lower.
Soybeans: 5 to 10 cents lower.
Wheat: 12 to 18 cents lower.
GENERAL COMMENTS: Corn, soybeans and SRW wheat faced active followthrough selling from Thursday’s losses overnight. HRW and HRS futures also dropped, more than erasing yesterday’s gains. All signs point toward a sharply lower open in grains this morning, though a series of daily soybean sales could somewhat limit buying in that market. The U.S. dollar index is down around 250 points, though that’s not likely enough to stir up buyer interest in grains.
USDA reported the following daily soybean sales:
- 325,000 MT to China in 2023-24
- 171,460 MT to Mexico in 2023-24
- 413,000 MT to unknown destinations in 2023-24
Since Monday, USDA has announced daily new-crop soybean sales of nearly 1.788 MMT.
The northwestern Corn Belt will see crop stress build over the next 10 days as rainfall in this area will be limited. The Delta is also expected to be hot and dry through at least the first week of August. There will be better rainfall chances across the Central Plains, middle to lower Corn Belt and Southeast during the 10-day period.
African leaders pressed Russian President Vladimir Putin to renew a deal on the export of Ukrainian grain and move ahead with their peace plan to end the Ukraine war. The African leaders are fearful of the war’s impacts on food prices, especially since Russia ended the Black Sea grain deal. Putin said rising world food prices were a consequence of Western policies that predated the war in Ukraine. He said Moscow respected the African peace proposal on Ukraine and was carefully studying it.
SovEcon raised its Russian wheat crop estimate 300,000 MT to 87.1 MMT amid increased harvested acres and record yields in the top producing Rostov region. However, the firm noted excessive rains ahead of harvest substantially lowered yield potential in Krasnodar. SovEcon raised its Russian total grain crop forecast to 134 MMT, up 900,000 MT from its prior projection.
The personal consumption expenditures (PCE) price index dropped to an annual rate of 3% in June, down from 3.8% in May and lower than economists expected. The core PCE, which excludes food and energy costs, declined to 4.1% from 4.6% in May.
CORN: December corn futures faced followthrough selling overnight, dropping below the 40-, 50- and 100-day moving averages. Near-term support is at $5.31 1/4. Near-term resistance is in a range from $5.42 to $5.50.
SOYBEANS: November soybean futures are challenging the steep uptrend from the late-May low. Near-term support is previous resistance at $13.78, followed by the 20-day moving average near $13.73 1/2. The 10-day moving average at $13.96 is near-term resistance, followed by the psychological $14.00 mark.
WHEAT: December SRW futures dropped below the 10-day moving average overnight, increasing seller interest. Near-term support extends from $7.14 to $7.00. The 10-day moving average near $7.33 is near-term resistance.
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mixed tone in what is likely to be light price action as traders await active cash cattle trade. Packers continued to show no willingness to actively raise cash cattle bids on Thursday, while feedlots weren’t interested in moving cattle at lower prices. Unless either side changes their stance, this week’s negotiated cash cattle trade will be light. Choice boxed beef prices fell 48 cents on Thursday, while Select was a nickel lower.
HOGS: Lean hog futures are expected to open with a mixed tone. August lean hog futures should be supported at least mildly by the discount they hold to the cash index. Deferred futures could face some pressure. The CME lean hog index is up just a nickel today (as of July 26), marking the smallest daily gain since a brief price dip in late May. But August lean hog futures still finished Thursday’s session $3.815 below today’s cash quote, which should limit any selling pressure tied to concerns the seasonal cash rally is losing steam. The pork cutout value firmed $1.98 on Thursday, though movement slowed to 191.2 loads.
