Ahead of the Open | June 14, 2023
GRAIN CALLS
Corn: 5 to 10 cents lower.
Soybeans: 5 to 10 cents lower.
Wheat: Winter wheat 8 to 15 cents lower; spring wheat 4 to 8 cents lower.
GENERAL COMMENTS: Corn and soybeans pulled back from their recent gains during overnight trade. Wheat faced spillover pressure and weakness from accelerating harvest activity. Traders ignored supportive outside markets, as crude oil is moderately higher and the U.S. dollar index is more than 350 points lower.
The eastern Corn Belt will get some rains today and Thursday, with more expected during the middle of next week. World Weather Inc. says other areas of the region will see minimal rainfall during the next 10 days, which will increase crop stress. Sporadic rains are also expected across the Northern Plains. Portions of the Delta and Southeast will receive frequent rains during the next week to 10 days.
Russia says its “goodwill” on the Black Sea grain deal “cannot be endless.” On Tuesday, Russian President Vladimir Putin accused the West of “cheating” Moscow by failing to deliver on promises to help get Russian agricultural goods to world markets. He also reiterated Russia was ready to exit the deal if its demands for improved access to agricultural exports weren’t met.
The broader market focus today is the Fed’s decision on interest rates this afternoon. Traders widely expect the Fed to pause its tightening cycle, which is pressuring the U.S. dollar index.
CORN: December corn futures pulled back from recent gains overnight. The contract spiked the 100-day moving average for the first time since Dec. 30 of last year during Tuesday’s session. That level near $5.56 is formidable resistance as the contract hasn’t closed above it since late November of last year. Near-term support is the 5-day moving average around $5.41 1/2.
SOYBEANS: November soybean futures remain in the downtrend drawn off the February and March highs. That resistance is near $12.43 1/2 today and lines up with the 50-day moving average, followed by Tuesday’s high at $12.49 1/4. Near-term support is the 40-day moving average at $12.25 1/2.
WHEAT: July SRW futures remain in the long-term downtrend. Tuesday’s high at $6.49 1/4 is near-term resistance. Near-term support is in the $6.20 to $6.00 range.
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone following a high-range close on Tuesday. Cattle futures continue to trade well below the cash market, which limits the downside and could provide some support. But we expect traders to keep futures well below the cash market. While cash cattle trade doesn’t seem likely until late tomorrow or Friday unless packers actively bid for supplies, Choice boxed beef prices continue to climb. Choice boxed beef prices firmed another 56 cents on Tuesday to $337.99, the highest price since the 2021 peak at $348.03. While Select beef dropped 76 cents on the day, movement improved to 137 loads, signaling retailers remain selective buyers. Strength in the wholesale beef market has kept packer margins in the black despite the record prices they are paying for cash cattle.
HOGS: Lean hog futures are expected to open with a mixed tone. June lean hogs could face some pressure as the contract finished Tuesday at a $1.715 premium to today’s cash quote (as of June 12). June hogs expire today and will be cash settled on Friday. Deferred lean hog futures could find some support from the continued seasonal climb in the cash market. Additionally, the pork cutout value firmed $1.32 on Tuesday to $89.52, a new high for the year, while movement increased to 385.2 loads. While the pork market is strengthening seasonally, the advance hasn’t kept pace with gains in cash hogs, which has driven packer margins sharply into the red.
