Ahead of the Open | May 18, 2023
GRAIN CALLS
Corn: 6 to 12 cents lower.
Soybeans: 10 to 15 cents lower.
Wheat: SRW 14 to 20 cents lower; HRW and HRS 25-plus cents lower.
GENERAL COMMENTS: Active followthrough selling was seen in the corn, soybean and wheat markets overnight amid chart-based selling and a lack of supportive news. Poor weekly export sales data will add to the pressure this morning, along with negative outside markets. Traders are in full sell mode.
Russia says “various options” are being worked out regarding easing restrictions on Russia’s state agricultural bank, as part of its agreement to extend the Black Sea grain deal for two months through mid-July. Russian Foreign Minister Sergei Lavrov said Russia agreed to extend the deal to bolster world food security, despite not seeing results in improving its grain and fertilizer exports. Russian Ag Minister Dmitry Patrushev said Russia could export 50 MMT to 55 MMT of grain in 2023-24.
On Day 2 of the Wheat Quality Council’s HRW wheat tour, scouts found an average yield of 27.5 bu. per acre on samples taken from western and south-central Kansas. That was down from an average yield of 37 bu. per acre in the same areas last year and the 2017-22 average of 44.7 bu. per acre. Scouts found freeze damage, along with the impacts from the prolonged and severe drought. Separately, the Oklahoma Wheat Commission estimated the Oklahoma wheat crop at 49.4 million bu., down from last year’s drought-shortened crop of 68.6 million bushels. Scouts will sample fields in central and eastern Kansas today on routes from Wichita to Manhattan. A final tour yield estimate along with a scout guesstimate of Kansas crop size will be released this afternoon.
World Weather Inc. says the Plains will receive periodic rainfall through the next 10 days from West Texas to western Nebraska. Much of the moisture will come late for winter wheat, but it will be good for summer crops. Generally favorable weather will continue across the Corn Belt, Delta and Southeast.
Export sales for the week ended May 11:
Corn: Net sales reductions of 339,000 MT for 2022-23, a marketing-year low. That included reductions of 271,200 MT to China and 85,600 MT to unknown destinations. Net sales of 74,000 MT for 2023-24. Traders expected sales of (500,000) to 300,000 MT for 2022-23 and 50,000 to 300,000 MT for 2023-24.
Beans: Net sales of 17,000 MT for 2022-23, down 73% from the previous week and 89% below the four-week average. That included reductions of 119,200 MT for China. Net sales of 663,800 MT for 2023-24. Traders expected sales of 0 to 300,000 MT for both 2022-23 and 2023-24.
Wheat: Net sales reductions of 42,100 MT for 2022-23, a marketing-year low. Net sales of 336,800 MT for 2023-24. Traders expected sales of 50,000 to 150,000 MT for 2022-23 and 50,000 to 300,000 MT for 2023-24.
CORN: July corn futures pivoted around Wednesday’s low overnight, which was the lowest since the first trading day of the year. The contract is technically oversold, but that’s not likely enough to spark a corrective rebound on its own. Near-term support is in the $5.50 to $5.41 range. Near-term resistance is in the $5.74 to $5.75 range.
SOYBEANS: July soybean futures extended this week’s technical breakdown overnight. The contract is short-term heavily oversold but showing no signs of downside momentum stalling. Near-term support is in the $13.20 to $13.00 range.
WHEAT: July HRW wheat futures posted sharp losses overnight after a poor close on Wednesday. The contract looks toppy after what appears to be a failed breakout above the February high. Traders started to correct the HRW/SRW spread, which topped $2.60 yesterday, though it’s still historically wide. Near-term support is in the $8.60 to $8.50 range.
CATTLE: Firmer.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a firmer tone on followthrough buying after a strong close Wednesday produced bullish reversals on the daily charts. Buyer interest could be limited as traders wait on cash cattle trade to develop. Packers so far have attempted to buy cash cattle at lower prices, though feedlots aren’t interested after last week’s average cash price ticked up 20 cents. With neither side seemingly in a hurry to get active cash trade underway, cash negotiations could go deep into the week – potentially after Friday afternoon’s Cattle on Feed Report. Wholesale beef prices weakened yesterday, with Choice down $1.32 and Select $1.46 lower, though movement was solid at 120 loads. USDA reported beef export sales of 17,400 MT for 2023, up 5% from the previous week and 7% above the four-week average.
HOGS: Lean hog futures are expected to open with a mostly lower tone after sharp losses on Wednesday as traders narrowed premiums to the cash index. The CME lean hog index is up another 63 cents to $77.80 (as of May 16), extending its seasonal price climb, though traders don’t want premiums to get too aggressive since the cash advance has been methodical. The pork cutout value fell 68 cents on Wednesday as packers continue to struggle to find sustained retailer buying. Traders remain hesitant buyers in hog futures given their premiums to the cash index. USDA reported pork export sales of 31,900 MT for 2023, up 6% from the previous week but down 25% from the four-week average.
