Ahead of the Open | July 28, 2021

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GRAIN CALLS

Corn: 3 to 5 cents higher.

Soybeans: 5 to 7 cents higher.

Wheat: 9 to 18 cents higher.

 

GENERAL COMMENTS:

Wheat futures strengthened overnight after the first day of a crop tour through North Dakota confirmed severe drought damage to the spring wheat crop. Corn and soybean futures were also firmer amid ongoing concerns with extreme heat and dryness in the northwest Corn Belt. Nymex crude oil futures and the U.S. dollar index are higher this morning.

Heat advisories are in effect for South Dakota, the southern half of Minnesota and eastern Illinois, which may lead to tornadoes and other severe weather later today, the National Weather Service warned. World Weather Inc. said last night’s GFS model run indicated reduced rainfall chances from Oklahoma and the Texas Panhandle through the northwestern part of the Corn Belt August 6-8.

The world lost 15 MMT of crop production due to bad weather over the past two to three weeks, Archer Daniels Midland CEO Juan Luciano said on an earnings call yesterday, citing the drought’s toll on canola crops in Canada’s Southern Prairies and the U.S. Northern Plains. To offset the gap in canola supplies, Luciano said China will need to import an additional 2 million metric tons (MMT) of soybeans.

Egypt bought 120,000 MT of wheat from Ukraine and 60,000 MT of wheat from Romania in a tender yesterday.

CORN: December corn futures held within this week’s range overnight. Chart levels to watch include yesterday’s high at $5.60 3/4, Monday’s low at $5.32 1/4 and the 100-day moving average around $5.37 3/4. Stochastics and the RSI remain neutral to bullish, suggesting sideways to higher prices near-term. A close above $5.73 1/2 is needed to test of this month’s high at $6.11 1/4.

SOYBEANS: November soybeans held within this week’s price range overnight as the market remained underpinned by concerns over Midwest dryness as the crop nears critical development phases in August. Chart levels to watch include yesterday’s high at $13.87 1/2 and Monday’s low at $13.32. Stochastics and the RSI are neutral to bearish, signaling sideways to lower prices are possible near-term.

WHEAT: Scouts on Day 1 of the Wheat Quality Council’s annual spring wheat tour found an average spring wheat yield of 29.5 bu. per acre, sharply below 2019’s 45.6 bu. per acre and the five-year average of 43.3 bu. per acre. Scouts noted plants were much shorter than normal and heavy grasshopper damage. September spring wheat futures overnight rose as high as $8.98 3/4, a high for the week.

 

CATTLE: Steady-mixed

HOGS: Steady-firmer

 

CATTLE: Cattle futures face a mixed outlook today following yesterday’s soft close and little direction from cash markets so far this week. Iowa markets witnessed some light cash trade around $124.50 yesterday, with a few animals moving at $121 in Nebraska, but activity was quiet elsewhere. Choice cutout values yesterday averaged $269.73, up $1.80 from Monday and the fifth consecutive daily gain since the market hit a 3 1/2-month low last week. Meatpackers slaughtered an estimated 238,000 head so far this week, up 6,000 from the same period last week and up 2,000 from the same period a year ago.

HOGS: Lean hog futures may extend this week’s climb to six-week highs as stronger demand boosts wholesale pork prices. Carcass cutout values yesterday averaged $123.49, up 55 cents on the day and the highest since June 17, according to USDA data. Carcasses on national direct markets yesterday averaged $105.54, down 45 cents. Meatpackers slaughtered an estimated 937,000 head so far this week, up 11,000 from the same period last week and up 7,000 from the same period a year ago. October lean hogs yesterday reached $94.05, the highest intraday price since $94.45 on June 15.

 

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