Ahead of the Open | May 19, 2023
GRAIN CALLS
Corn: 3 to 6 cents higher.
Soybeans: 8 to 16 cents higher.
Wheat: 5 to 10 cents higher.
GENERAL COMMENTS: Grain and soy markets firmed overnight in what could be a “dead-cat bounce,” as supportive news is lacking and the path of least resistance is down. Aside from modest corrective buying, the upside is limited until there’s a bullish catalyst or funds broadly decide prices are low enough to present a strong value buying opportunity.
The U.S. and the rest of the Group of Seven (G7) major economies will unveil new sanctions and export controls targeting Russia over its war against Ukraine, a U.S. official said. Britain said its sanctions would include targeting companies connected to the theft of Ukrainian grain and those involved in the shipment of Russian energy. Meanwhile, G7 leaders said they “continue to support the export of Ukrainian agri-products.” The G7 leaders will also spend substantial time discussing China and how to deal with Beijing’s relationship with Russia.
SovEcon raised its Russian wheat crop estimate by 1.2 MMT to 88 MMT due to improved crop conditions in the southern growing region, which received 100% to 150% of normal rainfall over the past month. In 2022, Russia harvested a record 104.2 MMT wheat crop.
World Weather Inc. says frosts and freezes occurred this morning in western North Dakota and surrounding areas, though crop impact will be limited since planting and emergence in this area is limited. Warm, dry conditions are expected across most of the Corn Belt over the next 10 days. That will improve planting conditions in the wet areas and promote crop growth across the region. Notable rains fell across the Southern Plains on Friday and will continue this week. The rains are too late for most of the drought-damaged HRW crop, but will improve soil moisture for summer crops.
CORN: July corn futures pivoted around Thursday’s closing level overnight. Initial support is at Thursday’s low of $5.47, with additional support in the $5.45 to $5.35 area. Previous support at $5.69 1/4, which corresponds closely with the 5-day moving average, is near-term resistance.
SOYBEANS: July soybean futures posted a modest inside day up overnight amid corrective buying. Thursday’s low at $13.23 1/4 is initial support, followed by a band of support from $3.19 to the July 2022 low at $12.99. The 5-day moving average around $13.55 1/4 is near-term resistance.
WHEAT: July HRW wheat futures bounced overnight after price action the two previous days signaled a technical top. Thursday’s low at $8.45 3/4 is key near-term support, followed by the 40-day moving average near $8.39. Near-term resistance starts at the 10-day moving average around $8.67 1/2 and the 200-day average near $8.69.
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after another strong close on Thursday. But two-sided is possible as traders await active cash cattle trade to begin and position themselves for this afternoon’s Cattle on Feed Report. While cattle futures continued to trade at big discounts to the cash market, this week’s price gains suggest traders aren’t anticipating weaker cash trade. The Cattle on Feed Report is expected to show the May 1 feedlot inventory down 3.5% from year-ago. After placements came in stronger than expected in last month’s report, that category will be a focal point, with April placements expected to have declined 3.7%. April marketings are expected to have dropped 9.7%. The drop in wholesale beef prices paused yesterday as Choice boxes increased 16 cents and Select firmed 72 cents, though movement slowed to 82 loads.
HOGS: Lean hog futures are expected to open with a mixed tone. Buyer interest in hog futures has been limited despite the seasonally rising cash market. The CME lean hog index is up another 62 cents to $78.42 (as of May 17). As of Thursday’s close, June lean hog futures held a $6.88 premium to the cash index, which is stronger than the 10-year average rise of roughly $3.50 from now until June 16, the date the lead contract will be settled against the index. The pork cutout value firmed 66 cents on Thursday, though movement slowed to 209.3 loads.
