Ahead of the Open | July 11, 2021

GRAIN CALLS

Corn: 10 to 15 cents higher

Soybeans: 12 to 18 cents higher

Wheat: Winter wheat 6 to 12 cents higher; spring wheat 15 to 20 cents higher

GENERAL COMMENTS:Corn, soybean and wheat futures gapped sharply higher at the start of overnight trade. While markets ended the session with strong gains, futures finished under their opening levels and low range. Outside markets are highly negative this morning amid renewed Covid concerns in China and global recession fears. Front-month U.S. crude oil futures are down more than $3.50 this morning, while the U.S. dollar index is nearly 1,000 points higher.

Rains are falling across areas of the western Corn Belt this morning but are expected to dissipate around midday and not extend into the eastern Belt. Rainfall will be limited across the Corn Belt, Central and Southern Plains and Delta this week. World Weather Inc. says, “Temperatures in the 90s to 105 degrees Fahrenheit will occur in the western Corn Belt briefly late this week and again for a longer period of time next week. This will accelerate drying and deplete soil moisture very quickly, raising the need for generalized rain once again, but that is not likely to come anytime soon leading to rising levels of crop stress next week. Completely dry weather is not expected, but it will be dry enough and hot at times to accelerate drying rates.”

Aiming to induce a global food crisis, Russian forces in Ukraine are systematically destroying grain crops, Ukrainian Foreign Ministry Spokesperson Oleg Nikolenko said via Twitter. Nikolenko posted a photo of a fire consuming a grain field in southeastern Ukraine. “Russia’s troops set fire to grain fields in Ukraine’s fertile Zaporizhzhya region,” said Nikolenko. “Remember this picture every time Russians say they care about global food security. Millions of people across the world will face hunger – because Russia launched a brutal war against Ukraine.” Other pictures and video on social media corroborated Nikolenko’s claim of Russian troops destroying Ukraine grain fields. Meanwhile, the World Food Program says the Ukraine war is pushing millions of the world’s poorest toward starvation.

Preparations are underway ahead of USDA’s July crop reports on Tuesday. USDA’s updated balance sheets in the Supply & Demand Report will reflect changes to old-crop demand forecasts based on June 1 stocks and its new-crop planted acreage estimates. USDA will also release its first all-wheat production estimate, including the first survey-based forecasts for other spring wheat and durum. The average pre-report estimates for old-crop ending stocks are 1.488 billion bu. for corn and 208 million bu. for soybeans. Old-crop wheat ending stocks were set at 660 million bu. by June 1 stocks. For new-crop ending stocks, the average pre-report estimates are 1.442 billion bu. for corn, 211 million bu. for soybeans and 638 million bu. for wheat. All-wheat production is expected to come in at 1.745 billion bu., with winter wheat at 1.186 billion bu., other spring wheat at 458 million bu. and durum at 63 million bushels.

We expect outside market pressure and the rains across the western Corn Belt this morning will create less buyer interest in the grain and soy markets during daytime trade than was seen overnight.

CORN:December corn futures gapped sharply higher overnight but finished the session near the lows. Near-term trading boundaries are clearly set, with support at the overnight gap from $6.38 to $6.26 and the overnight high of $6.58 1/2 marking strong resistance.

SOYBEANS:November soybeans left a big gap overnight on the daily chart from $14.10 1/2 to $13.98 3/4. That is key near-term support. The overnight high at $14.38 1/2 is near-term resistance.

WHEAT: December SRW wheat futures filled much of the overnight gap by the end of the session, though the open area from $9.13 1/4 to $9.09 1/2 is near-term support. The overnight high at $9.54 is solid near-term resistance.

LIVESTOCK CALLS

CATTLE: Choppy/firmer

HOGS: Choppy/firmer

CATTLE:Live cattle futures should find support from the discount nearby futures hold to the cash market, though any buyer interest will likely be limited by a weakening product market and negative outside markets. Boxed beef prices softened Friday and movement was light at only 91 loads, suggesting retailers completed their post-Fourth restocking. With no major “beef holidays” until Labor Day, the wholesale market is likely to soften through the heart of summer. But tight market-ready supplies could keep the cash cattle market relatively well supported even if wholesale beef trade slows. The U.S. dollar index is firmer this morning and stock index futures point toward a lower open for the stock market this morning.

HOGS: Lean hog futures should be supported by expectations the cash hog market will continue to strengthen. The CME lean hog index is up 81 cents today (as of July 7) at $110.97. July hogs finished Friday $1.88 above that level, signaling traders anticipate more near-term cash market strength ahead of the contract’s expiration Friday and settlement July 19. But August hogs finished at a $1.795 discount, suggesting traders sense the cash market may be near a seasonal peak. The wholesale pork market remains supportive. The cutout firmed $2.34 on Friday amid gains in all cuts except butts and packers moved a solid 304.3 loads. Outside markets may limit buying interest in hog futures.