Ahead of the Open
GRAIN CALLS
Corn: 1 cent higher to 2 cents lower.
Soybeans: 2 cents higher to 2 cents lower.
Wheat: 6 to 14 cents higher.
GENERAL COMMENTS:
Corn and soybean futures are expected to open mostly lower, with the exception of nearby contracts, as Midwest weather continues to favor crop development. Overnight gains in wheat were led by spring wheat futures, boosted by dryness concerns in the Northern Plains. The U.S. dollar index is mildly weaker, while crude oil futures are up around 1% and near 2 1/2-year highs.
Over the past week, eastern and central sections of the Midwest received 0.5 to 3 inches of rain, with local amounts of 5 inches or more in central Indiana and southwestern Ohio, according to World Weather Inc. Pockets in southern Michigan, southern Iowa, northern Missouri and west-central Illinois also received 4 inches or slightly more.
But not every field got soaked. “The far western Corn Belt remains too dry for aggressive growth and crop conditions have further deteriorated. Concern over production potentials may increase if dryness persists,” World Weather said in a report today.
USDA announced daily new-crop soybean sales to China totaling 330,000 MT.
In overnight export news, Jordan’s state grain buyer canceled a tender Tuesday to buy 120,000 MT of milling wheat for December shipment and issued a new tender to buy 120,000 MT of wheat with a bidding deadline of July 6. Egypt purchased 63,000 MT of soyoil and 10,500 MT of sunflower oil in an international tender. The Taiwan Flour Millers association issued an international tender to buy 55,000 MT of grade 1 milling wheat from the U.S.
CORN:
Corn traded in tight ranges overnight, suggesting some consolidation activity may be ahead today. Weather will remain in keen focus with the crop’s critical pollination nearing in July. Expected crop improvement from recent Midwest rain will have to show up in crop ratings soon. USDA’s crop progress report Monday afternoon showed the U.S. corn crop rated 65% “good” to “excellent” condition as of Sunday, down from 68% a week ago and 72% a year ago. Chart levels to watch include December futures’ low last week at $5.30 1/2.
Firmness in global vegetable oil prices may continue to provide a boost to part of the soy complex. Traders will be watching July weather outlooks closely and expecting to see improvement in crop ratings. USDA reported 60% of the U.S. soybean crop in “good” to “excellent” condition as of Sunday, down from 62% a week ago and 70% a year ago and meeting analyst expectations. Chart levels to watch include last week’s low in November soybeans at $12.40 1/2.
WHEAT:
Spring wheat remains the upside leader as the crop withers under extreme heat and dryness in the Northern Plains, though the accelerating winter wheat harvest may limit gains in HRW and SRW futures. USDA pegged the spring wheat crop’s condition at just 27% “good” to “excellent,” down from 37% a week ago. Chart levels to watch include September HRS futures’ two-week high yesterday at $8.02 1/4.
CATTLE: Steady-firm
HOGS: Steady-mixed
Futures may continue to gain lift from strength in the cash cattle market, even as beef prices slip. Live steers in top U.S. cattle states averaged $126.26 yesterday, up $3.42 from Monday, according to USDA. Boxed beef prices continued declining amid slower retail demand, with choice cutout values averaging $315.75 yesterday, down $5.45 from Monday and the lowest since May 12.
In USDA’s monthly Cold Storage Report yesterday, estimated U.S. beef stockpiles as of May 31 were 414.0 million pounds, down 7.8% from 448.9 million at the end of April and down 0.8% from 417.4 million on the same date a year earlier. Traders await Friday’s monthly USDA Cattle on Feed Report. Market bulls retain the near-term technical advantage in cattle futures, with upside price objectives including closing August live cattle’s contract high of $125.775, reached June 16. Downside levels to watch include last week’s low at $120.00 and solid technical support at $117.50.
USDA’s monthly Cold Storage Report yesterday fueled concerns about slower Chinese buying, while whole pork prices plummeted. USDA estimated U.S. frozen pork stockpiles as of May 31 at 461.1 million pounds, down 1.5% from a year earlier but up 0.9% from the end of April. But cash hog markets were firm. National direct carcasses yesterday averaged $128.04, up $4.48 from Monday, according to USDA. Pork cutout values averaged $107.83, down nearly $13 from Monday and the lowest since April 29. Traders await USDA’s next Quarterly Hogs & Pigs Report Thursday. Chart levels to watch include August futures’ low yesterday of $103.475, near a two-month low, and the 100-day moving average just above $102.00.
