Ahead of the Open | May 24, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 2 cents lower to 2 cents higher.
Wheat: 4 to 8 cents lower.
GENERAL COMMENTS: Wheat futures pulled back from gains earlier this week during overnight trade. Corn traded lower for much of the overnight session but firmed late, while soybeans traded narrowly mixed. Crude oil futures are price-supportive, trading around $1.00 higher. The U.S. dollar index has backed off its earlier gains and is now near unchanged.
Uncertainties with the debt limit continue to hang over markets. House Speaker Kevin McCarthy (R-Calif.) and his top GOP allies said the two sides aren’t close to an agreement. It appears this will go down to the 11th hour, which doesn’t breed confidence for traders.
China is facing a new wave of Covid-19 infections that could see as many as 65 million cases per week by the end of June, predicted respiratory disease specialist Zhong Nanshan. According to a Bloomberg report, XBB is expected to result in 40 million infections per week by the end of May before peaking at 65 million a month later.
World Weather Inc. says forecast models continue to show a dry pattern over the Midwest during the next 10 days, which will increase the need for rains during June. Southwestern areas of the Plains will receive frequent rains during the next week to 10 days. The rains will be too late for winter wheat but will help summer crops in the region.
CORN: July corn futures pulled back a little during overnight trade after failing to clear Tuesday’s high and following two days of corrective gains. The Tuesday/overnight double-top at $5.80 3/4 lines up with the 20-day moving average to form solid near-term resistance. Above that level, bulls could make a run at the last reaction high at $6.00. Near-term support starts at the 10-day moving average at $5.73 3/4.
SOYBEANS: July soybean futures continue to consolidate in a broad pattern around the recent lows. Near-term support and resistance are at $13.04 3/4 and $13.48, respectively.
WHEAT: July HRW wheat futures erased much of Tuesday’s gain during overnight trade. Near-term support starts at the 20-day moving average near $8.29 1/2 and then Monday’s low at $8.07 1/4. Near-term resistance is at Tuesday’s high of $8.49 1/2.
CATTLE: Choppy/lower.
HOGS:
CATTLE: Live cattle futures are expected to open lower on followthrough selling after a bearish reversal in front-month June futures on Tuesday. Traders are still waiting on cash cattle trade to develop. Opinions remain split on whether prices will firm again this week or packers will be successful in getting feedlots to move cattle at lower prices. Active trade isn’t expected until late in the week. Meanwhile, Choice boxed beef prices traded 18 cents high on Tuesday morning but faded to a $3.16 loss for the day. The afternoon price dive sparked a pickup in movement, which totaled 126 loads on the day. Retailers continue to show they are selective buyers with Choice beef prices above $300.00. This afternoon’s Cold Storage Report will highlight meat stocks at the end of April. The five-year average is a 15.1-million-lb. decline in beef stocks during the month.
HOGS: Lean hog futures are expected to open lower on followthrough selling after another poor performance on Tuesday. While futures are short-term oversold, traders are showing no signs of halting the recent selloff. June lean hog futures briefly traded below the cash index on Tuesday but finished the day 58.5 cents above today’s quote of $80.09 (as of May 22). The cash index has risen $8.91 since its low on April 24, while June hogs have fallen $6.90 during that span, virtually erasing all of the premium traders had built in. The pork cutout value fell $1.27 on Tuesday, though movement improved to 317.8 loads. The product market signals retailers remain price-sensitive, despite pork’s relative value to beef given the abundant supply situation. The five-year average for pork stocks during April is a 16.9-million-lb. increase.
