Ahead of the Open | July 2, 2021

GRAIN CALLS

Corn: 1 cent lower to 1 cent higher.

Soybeans: 11 to 17 cents higher.

Wheat: 3 cents lower to 8 cents higher.

GENERAL COMMENTS:

Corn and wheat futures are expected to open mixed and soybeans are likely to open higher ahead of a three-day holiday weekend. Crude oil futures are down slightly but still near 2 1/2-year highs.

Grain and livestock markets will trade normal hours today ahead of the extended weekend. All markets and government offices are closed July 5 in observance of Independence Day. Grain and livestock markets will reopen at 8:30 a.m. CT on July 6.

Midwest and Northern Plains weather remains a focal point. Below-normal rainfall and above-normal temperatures are expected in the upper half of the Midwest for the next month, based on a National Weather Service outlook earlier this week.

The U.S. Drought Monitor for the week ended June 29 showed an easing of drought conditions from the Iowa/Missouri border through Wisconsin and Michigan. But nearly 86% of Iowa is still in abnormal dryness or drought.

U.S. job growth accelerated in June, with non-farm payrolls increasing by 850,000, the Labor Department reported today. June non-farm payrolls exceeded expectations for a gain of 706,000 and were up from a rise of 559,000 in May.

China’s state grains stockpiler Sinograin sold 28,298 metric tons (MT) of the 155,516 MT of imported corn from the U.S. and Ukraine it put up for auction today. That represented just 18.2% of the total. Previous auctions resulted in far stronger demand. The country is working to cool commodity price inflation. USDA’s attaché in Beijing expects China to import 28 MMT of corn in 2020-21, which is 2 MMT higher than USDA’s official estimate. It sees China’s corn imports easing to 20 MMT in 2021-22.  

CORN: December corn futures rose as high as $5.97 1/2 overnight and is on pace for a sharp rise on the week. USDA’s updated corn acreage estimate, at 92.692 million acres, was more than 1 million acres below expectations, fueling concerns over persistently dry conditions in the northwest Corn Belt. Chart levels to watch include yesterday’s high of $6.11 1/4.

SOYBEANS: November soybeans rose as high as $14.14 3/4 overnight and the unexpectedly low USDA acreage number has provided renewed bullish momentum to revisit contract highs posted in June. Chart levels to watch include yesterday’s high of $14.23.

WHEAT: Spring wheat remains the upside leader in the wheat complex, as forecasts call for only light and scattered showers across the U.S. Northern Plains over the next two weeks. A brief cooldown from extreme temps is expected early next week, but the remainder of the two-week period is expected to feature above-normal readings. That will maintain crop stress in the region. As of June 29, USDA noted 93% of U.S. spring wheat areas faced drought conditions.

CATTLE: Steady-mixed

HOGS: Steady to weaker

CATTLE: Feeder cattle futures may face continued pressure if corn prices strengthen ahead of the weekend, while live cattle appear range-bound, with possible pressure from a wholesale beef market that’s dropped to two-month lows. Live steers averaged $123.79 in five top U.S. cattle markets yesterday, down from last week’s average of $125.47. Choice cutout values averaged $287.65, down 5.6% from $304.56 at the end of last week and the lowest since late April.

HOGS: Hog futures are burdened by weak technicals in the wake of yesterday’s sell-off and beliefs the market reached a seasonal top in June. Carcasses on daily direct markets averaged $108.65, down 7% from $116.89 at the end of last week, according to USDA. Pork cutout values averaged $113.90 yesterday, up from $110.04 at the end of last week. Slaughter so far this week, at 1.837 million head, trails last week at this point by 55,000 head.