Ahead of the Open | July 26, 2023
GRAIN CALLS
Corn: 4 to 6 cents lower.
Soybeans: Steady to 5 cents higher.
Wheat: Winter wheat 10-15 cents lower; spring wheat 5-10 cents lower.
GENERAL COMMENTS: Consolidation occurred for most of the overnight session in the grain markets. Futures have been resilient and have held up Monday’s gains well, yesterday’s session during the day showed more buying interest than in the overnight session, that would be a beneficial trend to see once again today and would give bull’s confidence to push the market higher. Continued news about grain coming out of the Black Sea and weather will continue to drive the markets. Outside markets are mixed, with both crude oil futures and the U.S. dollar index lower.
The Federal Reserve’s interest rate decision will be a market moving force this afternoon, the Fed is expected to raise rates 25 BPS to a 5.25% to 5.50% range, the highest in 22 years. There will be additional insight in the press conference following the 1:00 p.m. CT interest rate decision on future policy decisions. Interest rate futures do not currently price in additional hikes this year.
The Russian government is hosting African countries in St. Petersburg in an effort to enhance partnership across key areas such as politics, security, economy, technology and culture. While Russian grain deliveries and military aid are anticipated outcomes of the summit, it is not expected that this event will trigger a significant shift of African nations towards Russia. Strong variations in responses from individual African states are anticipated.
Conditions are expected to be typical for mid-summer with periodic showers and thunderstorms with hot weather, though conditions are expected to cool a little in the second week of the outlook, World Weather Inc says. Conditions remain too dry and western Midwest temperatures will be very warm for a few days stressing dry crops. Drying is also likely in the Delta over the coming week.
CORN: December corn futures continue to consolidate after Monday’s explosion higher. So far, corn has remained in yesterday’s session, posting the second inside day in a row. Support can be found at $5.53 3/4, quickly backed by $5.50. Bulls are targeting a break above $5.72 1/4.
SOYBEANS: November soybean futures have shown relative strength compared to corn and wheat. Soybeans are posting the second inside day in a row, consolidating but retaining an uptrend. Support can be found at $14.01 1/2, backed by $13.98 1/2. Bulls are targeting Monday’s high at $14.35.
WHEAT: December SRW futures are pulling back but have been supported by the 200-day moving average thus far at $7.57 1/4. Additional support will come into play at $7.46. Bulls are targeting resistance at $7.81, then Tuesday’s high at $7.96 1/4.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a firmer tone following Tuesday afternoon’s Cold Storage Report which showed beef supplies tighter than expected. Beef demand remains robust which is supportive for the cattle complex. Prices have faced technical selling pressure recently, but the steep discount from cash prices should provide a bid under futures in the coming days. Futures traders are awaiting a turn in cash prices that has yet to come, cash prices continue to rise as packers raise bids despite poor margins. The wholesale market is on a three-day win streak as well, also supportive for futures.
HOGS: Lean hog futures are expected to open higher though profit-taking could limit buyer interest after the open. Lean hog futures hit a new for-the-move high on Tuesday, the highest level since mid-March. The cash index continues to march higher, rising 70 cents to $105.26, as of July 24. Futures retain a discount to the cash index, though the gap has narrowed Tuesday as August futures surged higher. Traders appear to be noticing the steep discount is not warranted, given the upcoming expiration of the August future and unrelenting strength in the cash market. Pork cutout fell $4.15 to $113.06 as bellies lost $14.38, though movement was strong at 381.57 loads.
