Ahead of the Open | June 9, 2023
GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 1 to 3 cents higher.
Wheat: SRW steady to 2 cents higher, HRW 3 to 6 cents lower; HRS 2 to 5 cents lower.
GENERAL COMMENTS: Overnight trade was relatively light in the corn, soybean and wheat markets as traders awaited USDA’s June crop reports later this morning. We expect relatively mild price action to continue early this morning. Outside markets are also quiet, with crude oil and the U.S. dollar index both modestly firmer this morning, though not enough to influence grain trade.
USDA reported daily soybean sales totaling 197,000 MT to unknown destinations for 2022-23.
USDA will likely raise its forecasts for old- and new-crop ending stocks for both corn and soybeans in the World Agricultural Supply and Demand Estimates (WASDE) Report later today. We expect cuts to old-crop use, which will push up carryover and likely trickle down through the 2023-24 balance sheets. Changes to the new-crop wheat balance sheet will be largely driven by any adjustment to USDA’s winter wheat crop estimate, which is expected to increase slightly from last month.
World Weather Inc. says high pressure will remain aloft over the central Canadian Prairies and influence a part of the U.S. Northern Plains and far northern Midwest this weekend through the middle of next week, limiting rainfall and producing warmer-than-normal temperatures. Rainfall advertised for the Midwest the next 10 days will be light enough to maintain some concern over long term soil moisture. Cooler weather this weekend and early next week across most of the Midwest will reduce crop moisture stress, although until there is a significant rain event, there will be some ongoing concern over long term crop development potential. World Weather says better rainfall chances could develop across the central U.S. during the second half of June into early July if the high pressure ridge currently over the Canadian Prairies shifts to the Southern Plains.
Russian Deputy Foreign Minister Mikhail Galuzin said a blast that damaged an ammonia pipeline between Russia and Ukraine would be taken into account during talks on the Black Sea grain deal.
While the rest of the world faces an inflation battle, China’s factory price deflation is accelerating. China’s producer price index (PPI) fell for an eighth consecutive month in May, down 4.6% annually – the fastest decline since February 2016 as sluggish demand weighed on a slowing manufacturing sector. The consumer price index (CPI) rose 0.2% from year-ago last month, up from a 0.1% increase in April.
CORN: July corn futures held within Thursday’s wide range overnight, maintaining the recent consolidation pattern on the daily chart. Near-term resistance is at Monday’s high of $6.14. Near-term support is in a range from $6.00 to $5.95 1/4.
SOYBEANS: July soybean futures inched higher overnight but were unable to push above yesterday’s high of $13.71 3/4, which will serve as initial resistance. Stronger resistance is at $13.83 3/4. Near-term support starts at the 5-day moving average around $13.59.
WHEAT: July SRW futures continue to consolidate while holding in the long-term downtrend. This week’s spike high at $6.48 stands as stout resistance. A close above that level would violate both the downtrend from the winter/spring highs and the longer-term downtrend drawn off last fall’s highs. Near-term support is in the $6.10 to $6.00 range.
CATTLE: Lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open lower on followthrough selling. While futures didn’t face active selling on Thursday, they faded to session lows ahead of the close. It will be key whether buyers show up under the market today or the corrective selling persists into the week. The latter would be a stronger sign of an extended pullback. While futures are pulling back the cash and product markets continue to strengthen. Cash cattle trade so far this week has averaged around $190.00, up sharply from last week’s $182.03 average. Choice beef prices firmed another $3.54 on Thursday, while Select rose $2.54.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from firming cash fundamentals. The CME lean hog index is up another 76 cents to $83.80 (as of June 7), extending the nearly seven-week seasonal climb to the highest level since late November. The pork cutout value remains in a general uptrend during the same period but has struggled to find sustained retailer buying in the mid- to upper-$80.00 range. While the cash and product markets are firming, traders may be reluctant to extend premiums in summer-month contracts, which could lead to some selling ahead of the weekend.
