Ahead of the Open | August 23, 2023
GRAIN CALLS
Corn: Steady to 3 cents higher.
Soybeans: Steady to 4 cents lower.
Wheat: Steady to 3 cents higher.
GENERAL COMMENTS: Corn and wheat saw relatively quiet action overnight with corn going into the break at session highs. Soybean futures saw relative weakness, though saw some strength into the break. Eyes will remain on the weather forecast which is expected to turn hotter once again next week and the Pro Farmer Crop Tour as it makes its way through Illinois and Iowa. Outside markets are unsupportive, with front-month crude oil futures down about $1.25 to $78.40 and the U.S. dollar index up around 400 points near 104.
Scouts on day 2 of the Pro Farmer Crop Tour found an average corn yield of 167.22 bu. per acre in Nebraska, up from 158.53 bu. per acre last year but down from the three-year average of 172.01 bu. per acre. Soybean pod counts in a 3’x3’ square came in at 1,160.02 for Nebraska, up from last year at 1,063.72 but down from the three-year average of 1,196.02.
In Indiana, samples yielded an average corn yield of 180.89 bu. per acre, up from 177.85 bu. per acre last year but down from the three-year average of 183.72 bu. per acre. Soybean pod counts in a 3’x3’ square totaled 1,309.96 for Indiana, up from 1,165.97 last year and the three-year average of 1,228.94.
On Day 3 of the Crop Tour, scouts on the western leg will sample fields in western Iowa, while scouts on the eastern leg will sample western Illinois and eastern Iowa.
Forecasts remain dry in the Great Plains, Midwest and northern Delta over the next ten days without any meaningful rainfall expected. Temperatures will be very warm to hot again today and Thursday in the middle two thirds of the Great Plains and in the western Midwest, says World Weather Inc. Cooling is expected Friday and into the weekend, with temperatures Sunday nearing normal. Temperatures are expected to turn warmer than average again late next week.
Russian drones struck Ukrainian grain infrastructure near the Danube River overnight, damaging a storage and cargo complex in the Odesa region. Nine drones were shot down as Russia is desperately trying to shut down Ukrainian grain exports. Ukraine has been using river channels to export more than 60% of their current grain exports, with rail and trucks accounting for most of the rest, according to UkrAgroConsult.
Private exporters reported sales of 100,000 MT of soybean meal for delivery to unknown destinations during the 23/24 marketing year.
CORN: December corn futures remain supported by discounted prices and a recent uptick in export demand, but failure at technical resistance and the overall downtrend on the daily bar chart continues to weigh on prices. Futures traded in a relatively tight range overnight and went into the break up about 3 cents. Resistance can be expected at the 10-day moving average at $4.87 then $4.96. Support can be found at $4.74 1/4 then $4.73 1/2.
SOYBEANS: November soybean futures have reached prior resistance that capped all gains prior to last week’s breakout. This support at $13.40 will be key in keeping the recent bullish momentum in place, failure below which likely indicates price will once again be caught in the sideways range from the first half of August with support at $13.00 and resistance at $13.40. Bulls are looking to overcome resistance at $13.48 then $13.75.
WHEAT: December SRW futures traded relatively flat overnight despite continued attacks on Ukrainian export infrastructure. Resistance can be expected at $6.37, strength above which would indicate an interim low is in place. Support can be expected at last week’s low of $6.12, backed by $6.08 1/4.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open higher following the retest of technical support. If this support fails, it would be significant and would indicate more weakness to come. Cash trade has yet to develop yet this week as packers and producers both feel they have the edge in negotiations. Back-to-back weeks of weakness in cash prices do not bode well for bulls, even though market ready supplies remain tight. Wholesale prices reversed Monday’s losses and turned higher Tuesday, with Choice cutout rising $1.49 to $317.05 and Select cutout rising $2.18 to $289.51, narrowing the Choice/Select spread to $27.54. Increased wholesale prices should give packers confidence to up cash bids, especially if the recent uptrend continues after prices were relatively flat at $300 in late July/early August. The CME cash index is projected to fall another 77 cents to $98.04 as of Monday. Wholesale prices continue to face weakness as well, with yesterday’s quote continuing midsession weakness and falling $1.56 to $103.65, led lower by bellies for the most part.
HOGS: Lean hog futures are expected to open lower continuing this week’s downtrend from technical resistance. Fundamentals have been eroding recently as well as traders anticipate a breakdown in cash hog and wholesale pork values over the coming weeks and months, exemplified by the $18 spread between October futures and current cash prices. The CME cash index is projected to fall another 77 cents to $98.04 as of Monday. Wholesale prices continue to face weakness as well, with yesterday’s quote continuing midsession weakness and falling $1.56 to $103.65, led lower by bellies for the most part.
