Ahead of the Open | June 7, 2023
GRAIN CALLS
Corn: 2 to 5 cents lower.
Soybeans: 2 cents lower to 4 cents higher.
Wheat: SRW steady to 2 cents higher; HRW and HRS 1 to 3 cents lower.
GENERAL COMMENTS: Price action was relatively quiet in two-sided overnight trade. We expect choppy price action as traders monitor weather forecasts and prepare for USDA’s reports on Friday. Outside markets are mildly friendly for grains, though that had little influence overnight. Crude oil futures are around 80 cents higher and the U.S. dollar index is more than 100 points lower.
World Weather Inc. says most of the Corn Belt will receive some rains over the next week, though soaking rains will be lacking. Temps will also be cooler over the next week, While these conditions will help limit crop stress, greater rains will be needed.
China imported a record 12.02 MMT of soybeans during May, up 68% from April and 24% above year-ago, as cargoes delayed by strict inspections were unloaded at ports. Imports this month could be even larger as active shipments of Brazilian supplies arrive at Chinese ports.
About one-third of the wheat across southern Henan, known as the granary of China, reportedly has sprouted from recent heavy rains. As we reported last week, an estimated 30 MMT of China’s wheat crop was impacted by the adverse late-season weather, which will result in an abundance of feed wheat – and the need for Chinese millers to import more high-quality supplies, despite record production.
CORN: July corn futures are consolidating around the recent highs. Near-term resistance is at Monday’s high of $6.14, followed by previous support at $6.15 3/4 and the 100-day moving average at $6.23 1/2. Near-term support is at the 50-day moving average at $6.03 1/2 and then $6.00.
SOYBEANS: July soybean futures are pivoting around last week’s high. Near-term resistance is at Tuesday’s high at $13.64 and then previous support at $13.85 1/4. Near-term support extends from $13.48 to $13.40 1/4.
WHEAT: July SRW futures failed to close above the downtrends drawn off the fall highs and the winter/spring highs on Tuesday after spiking those resistance levels. Tuesday’s high at $6.48 is near-term resistance. Neat-term support stands at $6.21 1/4 and $6.12 1/4.
CATTLE: Higher.
HOGS: Higher.
CATTLE: Live cattle futures are expected to open higher on followthrough buying after another round of contract highs on Tuesday – and an all-time high on the continuation chart – as futures continue to chase the cash market higher. Wholesale beef prices are also surging. Choice boxes jumped another $7.21 on Tuesday to $321.40, the highest level since September 2021. Select firmed $2.71 to $299.44. But it wouldn’t be surprising to see some corrective selling ahead of active cash cattle trade for the week as futures are heavily overbought and the market is due for a breather. The downside should be limited by strong fundamentals and the discount futures still hold to last week’s cash trade.
HOGS: Lean hog futures are expected to open higher after strong gains and high-range closes on Tuesday. But with futures trading well above the cash market, some seller interest could develop if early buying is light. The CME lean hog index is up 65 cents to $81.86 (as of June 5), extending the seasonal price climb. June and July hogs both held nearly $6.50 premiums to today’s cash quote on Tuesday’s close. For futures to continue their recent climb, the cash market must start showing stronger daily gains. The pork cutout value fell $4.08 on Tuesday, due mostly to a $23.78 drop in primal belly prices.
