GRAIN CALLS
Corn: 4 to 6 cents lower.
Soybeans: 5 to 7 cents lower.
Wheat: Winter wheat 5 to 7 cents lower; HRS 1 to 3 cents lower.
GENERAL COMMENTS: Soybeans saw strength to start the overnight session but have since faded lower. Grains favored the downside in overnight trade. Markets have largely shook off the surprise U.S. involvement in bombing Iran over the weekend, with risk assets showing just modest volatility overnight. Equity futures are currently trading modestly higher, front-month crude oil futures are slightly weaker and the U.S. dollar index is up around 600 points.
The U.S. military launched air strikes on Iran’s nuclear facilities at Fordow, Natanz and Isfahan early Sunday morning local time, with the U.S. intervening directly to support Israel’s efforts to dismantle Iran’s nuclear program. In response, Iran’s parliament has voted to close the Strait of Hormuz — the world’s most important oil shipping lane and a key waterway for global fertilizer shipments. The move awaits final approval from Iran’s Supreme Council. Israel carried out fresh strikes on Iran on Monday including on the capital of Tehran and Iran’s nuclear facility of Fordow which was also a target of the U.S. attack. Iran called President Donald Trump a “gambler” for joining Israel’s military campaign. China meanwhile said the U.S. attack had damaged Washington’s credibility and warned the situation “may go out of control.”
The extreme heat and wind across the Plains and Midwest during the weekend will abate, with seasonal temps and multiple rain chances likely this week. The high pressure ridge is expected to build over the Canadian Prairies, Rocky Mountain region and Northern Plains. The ridge is expected to weaken in early July, allowing some rain and thunderstorms into Canada, the Northern Plains and Midwest.
HCOB’s preliminary composite euro zone purchasing managers index compiled by S&P Global remained unchanged from the previous month at 50.2 in June. This reflected the sixth consecutive month above the expansionary threshold but continued to point to a muted pace of growth. The gauge for activity in the services sector pointed to modest improvement (50.0 vs. 49.7 in May), while manufacturing was unchanged (49.4).
CORN: December corn futures saw relative weakness overnight. Bulls are looking to hold key support at $4.35 on a continuation lower. Resistance stands at $4.40 1/4, the 10-day moving average, then $4.44 on a reversal higher.
SOYBEANS: November soybean futures gapped higher overnight but have since turned lower. Support comes in at $10.50 on continued selling pressure, which is backed by the 20-day moving average at $10.45 1/2. Resistance stands at $10.60 then the June 18 for-the-move high close at $10.68 1/4.
WHEAT: September SRW futures saw additional profit-taking overnight. Prices held key support at $5.75 overnight, which is reinforced by the 10-day moving average at $5.67 3/4. Resistance stands at $5.87 1/2, the 200-day moving average, then Friday’s for-the-move high of $5.94.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle and feeders are expected to open with a mostly firmer tone amid steep discounts to the cash market. Futures are in a precarious position as prices are on uptrend support and much additional weakness would indicate a technical breakdown on the daily bar chart. Back to back weeks of losses in futures have weighed on the cash market, with last week’s cash average likely to post a week-over-week drop for the first time in over two months. Meanwhile, USDA estimated there were 11.442 million head of cattle in large feedlots (1,000-plus head) as of June 1, down 141,000 head (1.2%) from year-ago. May placements declined 7.8% and marketings fell 10.1% from year-ago levels, with both categories slightly lower than the average pre-report estimates. The data is neutral compared to the pre-report expectations, but continues to paint an overall bullish supply picture.
HOGS: Lean hog futures are expected to open with a mostly firmer tone in a continuation of recent strength. July futures continue to grind higher, posting contract highs each day last week. That could spur some profit-taking as futures are overbought, but selling efforts are likely to be limited given continued robust strength in cash fundamentals. The CME lean hog index is up to $108.08 as of June 19. Pork cutout surged $3.16 higher on Friday, as all cuts posted gains on the day. Ribs led the way higher, rising $8.17.