Ahead of the Open | July 24, 2023
GRAIN CALLS
Corn: 20-25 cents higher.
Soybeans: 15-20 cents higher.
Wheat: 35-45 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat traded sharply higher overnight that will likely continue into daytime, although some profit taking is likely. The overnight geopolitical strife driven rally pushed into last week’s highs which have acted as stiff resistance thus far. Recent volatility is expected to continue as markets are driven by geopolitics and weather.
For the first time since the onset of the war, Moscow expanded their missile strikes to attack Danube River port infrastructure. These are near the western coast of the Black Sea and are currently the most important route for Ukrainian grain. One of the terminals struck is on the other side of the Danube River from NATO backed Romania. Shipments have already stalled out of Odesa and increased risk for Danube terminals will likely cease shipments there as well.
Ukrainian grain exports are expected to fall sharply in the 2023-24 crop year from the ongoing war and conclusion of the Black Sea Grain Initiative. Southern Ag Today found that Ukraine would fall from the third largest exporter of corn to the fourth, falling from 15% to 9.6% of global exports. Continued pressure on Black Sea ports is likely to make that number fall even more. Record Russian wheat exports for the second year in a row and a potential record U.S. corn crop has helped keep a lid on prices thus far, but as shown so far today, risk still lies in the inability to get Ukrainian grain to the world market.
Northwestern U.S. Corn and Soybean production areas will be dry biased this week but will begin seeing some rain this weekend and next week. The hottest weather should abate as well after this week as temperatures as the calendar flips to August. Rain covered portions of the northern Corn Belt as portions of Minnesota into northern Illinois, Indiana and Ohio, and southern Michigan received precip over the weekend. Additional rain fell in portions of southern Nebraska into Kansas and southern Missouri, but amounts were minimal apart from a few localized areas.
AgRural estimated Brazil safrinha corn harvest at 47% completed as of July 21, up from 36% the previous week and behind 62% last year.
Private exporters reported sales of 121,000 metric tons of soybeans for delivery to China during the 2023/2024 marketing year this morning.
CORN: December corn futures surged higher overnight but struggled against last week’s highs. If bulls garner support above $5.63, a charge to the 200-day moving average at $5.71 is likely. If profit-taking occurs after the open, support can be found around $5.48 then $5.40 1/4.
SOYBEANS: November soybean futures continue to trend higher on the daily bar chart with initial resistance at last week’s high of $14.28 3/4. Additional buying will find resistance at the psychological $14.50 level. If bears turn the market around when the market reopens, support can be found at the $14.00 level, backed by the 10-day moving average at $13.86.
WHEAT: December SRW futures surged above Friday’s high but have stalled below resistance at Thursday’s high of $7.68 3/4. The $7.70 area capped most of the upside in June and will remain stiff resistance. If profit-taking occurs on the reopen, support can be expected at Friday’s high of $7.52 1/4, though volatile market conditions will likely remain.
CATTLE: Choppy/higher
HOGS: Choppy/lower
CATTLE: Live cattle futures are expected to open higher following Friday’s bullish Inventory Report, which showed most classes shrinking more than expected versus last year’s numbers. Futures saw profit taking following Thursday’s all-time high, but prices have retraced to the 10-day moving average which has largely capped all selling pressure since mid-June. $179.525 will act as initial support with additional selling encountering support at $177.2. Bulls are targeting initial resistance at $181.875, then the all-time high of $182.975.
HOGS: Lean hog futures are expected to open lower after making a new for-the-move high on Friday. There was wholesale weakness in the latter half of last week in every cut but bellies, bellies have had an extended run higher that could be running out of steam. The cash market saw weakness on Friday as well. Support can be expected at Friday’s low of $100.4, backed by the psychological $100 level. Resistance can be found at the move-high at $101.875 with additional resistance at $101 on the way.
