Ahead of the Open | July 26, 2021

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GRAIN CALLS

Corn: 4 to 5 cents lower.

Soybeans: 10 to 12 cents lower.

Wheat: 6 to 12 cents lower.

 

GENERAL COMMENTS:

Corn and soybean futures fell near two-week lows overnight as forecasts indicated that after a hot, dry weather this week, the Corn Belt will experience cooler conditions in August. Wheat futures were also lower. Nymex crude oil futures were little-changed, while the U.S. dollar index was slightly weaker.

Midwest corn and soybean producing areas are expected to be warm with limited rainfall this week, resulting in net drying across much of the region, according to World Weather Inc. Temperatures are expected to be in the 90s to 100s Fahrenheit for the Northern and Central Plains early this week, and in the Central Plains and western Corn Belt midweek. Some rain could fall across 40% of the western Corn Belt at week’s end, with more rain possible early to midway through next week, the weather watcher adds. Showers are also possible for the eastern Belt over the weekend and next week.

China's soybean imports are set to slow sharply in late 2021 from a record first-half tally, confounding expectations for sustained growth from the top global buyer and denting market sentiment just as U.S. farmers look to sell their new crop, Reuters reported. A collapse in hog sector profitability and a sharp rise in wheat feed use are crimping demand in China, where imports this year may now be less than 100 million metric tons (MMT), compared with a recent U.S. forecast of 102 MMT.

Drought has caused water levels along the Parana River to fall to the lowest in 77 years, so low that ships moving along this key shipping hub are having to reduce cargoes by 25%. Concerns are mounting about the Parana’s ability to handle wheat exports later this year.

Excessive rains fell from western Hebei and far eastern and southern Shanxi southward through northeastern Hubei, all of Henan, much of Anhui and northern Jiangxi in central China last week. The areas affected are major producers of groundnuts (peanuts), corn and soybeans. Concerns are also mounting about lost livestock and the spread of disease given washed out manure pits and the country’s ongoing struggle to contain African swine fever. 

Drought has diminished Kazakhstan’s 2021 wheat crop prospects, but the country’s grain supplies should not be problematic thanks to high stocks of the grain and the country’s imports of grain from Russia, analysts with the country’s grain and oilseeds research bureau said. The bureau lowered its wheat crop forecast from 10 MMT to 9.5 MMT.

Mounting global concerns about some weather issues in key exporting countries pushed Russian wheat export prices higher last week, with IKAR ag consultancy estimating prices climbed $7 over the past week to $248 MT free on board and the consultancy SovEcon pegging the price rise at $6 to $245 per MT.

CORN: December futures overnight dropped under the 100-day moving average around $5.36 and fell as low as $5.33, the lowest intraday price since $5.27 1/2 on July 13. Chart levels to watch include the July intraday low at $5.07 and last week’s high at $5.73. Traders will scan USDA’s weekly crop progress report later today for indications whether rains earlier this month improved the harvest outlook. A week ago, USDA rated 65% of the corn crop “good” to “excellent,” unchanged from the previous week, while the portion of crop rated “poor” to “very poor” increased a point to 9%.

SOYBEANS: November soybeans fell as low as $13.32 overnight, the lowest intraday price since $13.27 on July 12, after falling nearly 3% last week, the second weekly decline in the past three. Chart levels to watch include the 100-day moving average around $13.27 and last week’s high, $14.18. Last week, USDA rated 60% of the U.S. soybean crop “good” to “excellent” as of July 18, up from 59% the previous week.

WHEAT: September SRW futures overnight fell as low as $6.65 1/2, the lowest intraday price since $6.51 1/4 on July 15. Chart levels to watch include the 200-day moving average around $6.43 and last week’s high as $7.18. USDA’s crop progress report later today is expected to show the winter harvest near completion. As of July 18, the harvest was 73% complete, one percentage point below the five-year average and in-line with year-ago. For spring wheat, USDA a week ago reported 11% of the crop in “good” to “excellent” condition, down from 16% the previous week. USDA rated 63% of the crop “poor” or “very poor,” up from 55% a week earlier.

 

CATTLE: Steady-firmer

HOGS: Steady-firmer

 

CATTLE: Futures may find support from lower-than-expected numbers in USDA’s latest monthly Cattle on Feed report Friday. USDA estimated 11.29 million head on feed as of July 1, down 1.3% from the same date a year earlier. Cattle placed in feedlots in June totaled 1.67 million head, down 7.1% from the same month in 2020. Placement were expected to have declined closer to 4.1%. The Cattle Inventory Report showed the U.S. beef cow inventory down 2% versus last year. On cash markets, live steers in top U.S. feedlot regions Friday averaged $120.65, down from $122.80 a week earlier, according to USDA. Choice cutout values ended last week at $266.63, down 0.5% from a week earlier. Last week’s slaughter was an estimated 652,000 head, down 1,000 from the previous week but up 1.9% from the same week a year ago. Chart levels to watch in August live cattle include $122.60, the intraday high July 14, the 100-day moving average around $120 and last week low of $119.20.

 

HOGS: Hog futures may extend week’s gains amid stronger chart patterns and strengthening pork prices. While carcasses on national direct markets fell Friday to $104.59, down 2.5% from a week earlier, carcass cutout values ended last week at $122.37, up 2% from a week earlier and the highest since June 17. Last week’s slaughter was an estimated 2.33 million head, up 2.3% from the previous week but down 9.5% from the same week a year earlier. On Friday, August lean hogs rose 70 cents to $107.35, the contract’s highest closing price since $111.70 on June 16. Chart levels to watch include last week’s high at $107.55 and the 40-day moving average around $108.

 

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