Ahead of the Open | July 19, 2021
GRAIN CALLS
Corn: 6 to 8 cents higher
Soybeans: 5 to 7 cents higher
Wheat: 9 to 18 cents higher
GENERAL COMMENTS:
Grain and soybean futures climbed overnight amid ongoing concerns over dryness in key U.S. growing areas, with nearby spring wheat gapping higher and reaching the highest levels in almost nine years. Crude oil futures were down nearly 4% after OPEC agreed to cease production cuts, while U.S. stock index futures also dropped. The U.S. dollar index reached a three-month high.
Weekend rainfall favored southern and eastern areas of the Midwest, though some rain fell in north-central North Dakota and the Central Plains. Weather was dry in other areas of the western Corn Belt. As expected, temperatures climbed well into the 90s for the Dakotas, with Montana recording temperatures in the 100s F. Through Thursday, any rain in the Northern and Central Plains or Midwest is expected to be too light or brief to counter evaporative moisture losses, and temperatures will be hot in the Northern Plains, according to World Weather Inc. More seasonable temperatures are likely for the Midwest, though the western Corn Belt should see temperatures creep into the 90s later this week.
China imported 3.75 million metric tons (MMT) of corn during June, triple levels from a year ago, according to data released by the General Administration of Customs. Year-to-date, China’s imports totaled 15.3 MMT, a 319% surge from year-ago. Wheat imports, at 750,000 MT for June, were behind year-ago, but year-to-date imports, at 5.37 MMT, were up 60% from last year at this point.
CORN:
December corn futures reached $5.67 1/2 overnight, the highest intraday price since $5.97 1/2 on July 2, as the market moves closer to filling a chart gap from after the July 4 holiday weekend. Traders await USDA’s weekly crop condition update later today. A week ago, USDA raised its “good” to “excellent” rating for the corn crop by one percentage point to 65%, while the “poor” to “very poor” rating dropped a point to 8%.
November soybeans overnight rose as high as $14.18, the highest intraday price since $14.23 on July 1, as a weather-driven rally appears poised to extend into late July. The northwest Corn Belt largely missed out on rain last week, and dryness may expand this week, World Weather said. Last week’s USDA ratings had 59% of the crop “good” to “excellent” and 11% “poor” to “very poor.”
WHEAT:
September spring wheat overnight surged to $9.44 1/2, the highest price on the continuation chart since November 2012. SRW and HRW wheat futures rose 8 to 10 cents overnight. USDA last week held its spring wheat crop ratings at 16% “good” to “excellent,” though there was a one-point drop from the top category and the portion of crop rated “poor” to “very poor” increased five points to 55%.
CATTLE: Steady-weaker
HOGS: Steady-firmer
CATTLE:
The cattle market ended last week on a weak note and faces a data-heavy week ahead, including USDA’s monthly Cold Storage update Thursday and Cattle on Feed and Cattle Inventory Reports Friday. Wholesale beef remains under pressure, with cutout values falling to a three-month low last week. Choice boxed beef cutout values averaged $267.94, down 3.8% for the week and the lowest price since April 7. Live steers averaged $122.80 in top U.S. feedlot regions at the end of last week, up from an average of $122.16 for the previous week, according to USDA. Chart levels to watch include August live cattle’s 100-day moving average around $119.90 and the intraday low so far this month at $118.90.
August futures remain at a large discount to the CME cash index. While cash hogs slipped last week, wholesale pork extended a recent climb amid firm demand and snug supplies. Last week’s slaughter, at 2.28 million head, was down 9.4% from the same week a year earlier. Carcasses on national direct markets averaged $107.32 at the end of last week, down 4.1% from $111.86 a week earlier. Cutout values averaged $119.94 at the end of last week, up 2.7% from $116.44 a week earlier.
Chart levels to watch include $106.80, last week’s high in August hogs, and the 100-day moving average around $104.17.
Over the weekend, Germany confirmed a third case of African swine fever on a farm in the eastern state of Brandenburg. The latest case was on a small farm within the restriction zone where the disease is common among wild boar. Late last week, the state confirmed the disease was present in two nearby farms.
Chinese live hog prices may continue to rebound, a government official said. Fewer pigs were born in January and February, which should lead to a drop in the number of hogs slaughtered in July and August. Outbreaks of ASF over the winter accelerated slaughter, weighing on prices during the second quarter and in turn triggering panic selling by producers. But prices have risen 15% since the start of June, with China making domestic pork prices for the first time since 2019.
