Ahead of the Open | July 6, 2023

GRAIN CALLS

Corn: 2 to 5 cents higher.

Soybeans: 2 to 5 cents lower.

Wheat: SRW 5 to 10 cents lower; HRW 4 to 8 cents higher; HRS 3 to 6 cents higher.

GENERAL COMMENTS: Grain and soy futures posted two-sided trade overnight. Corn, HRW wheat and HRS wheat futures finished with gains, while soybeans and SRW wheat futures dropped. Outside markets won’t likely provide a strong price direction for grains this morning as crude oil futures and the U.S. dollar index are both modestly weaker.

World Weather Inc. says there was very little change in the weather model data overnight. Forecasts continue to call for multiple rain events across the central U.S. over the next 10 days, with the greatest chances in southern and central areas of the Corn Belt. Rains will be light and sporadic across northern areas of the region – not enough to ease building dryness concerns.

SovEcon raised its 2023-24 Russian grain export forecast to a record 58.9 MMT, including 47.2 MMT of wheat. The Black Sea consulting firm now expects Russia to ship an additional 1.5 MMT of wheat and another 200,000 MT of corn above its previous forecasts.

Due to Tuesday’s government holiday, export sales data for the week ended June 29 will be released Friday morning.
 

CORN: December corn futures are basing around the May low, which could be a pause before the next leg down or the start of a corrective rebound. Weather premium has been removed, so any further weakness would be a strong statement from bears, though there’s no real reason for a bullish response other than the sharp downturn resulting in oversold conditions – unless weather turns hot and dry again.

SOYBEANS: November soybean futures are consolidating under the June highs after a failed upside breakout above that level on Monday. The pause could be the market catching its breath before the next push higher or signs of short-term topping action. Corn and soybeans are unlikely to trade in opposite directions for an extended period, so one will have to prove its dominance.

WHEAT: SRW futures are the weak link within the wheat complex, with the upside limited as long as bears control the corn market. HRW futures are supported by late-season rains that could hurt yields and crop quality in the Central Plains, while HRS futures are supported by building dryness concerns in the Northern Plains.  

LIVESTOCK CALLS

CATTLE: Lower.

HOGS: Choppy/higher.

CATTLE: Live cattle futures are expected to open lower on followthrough selling after sharp losses and low-range closes on Wednesday. While futures are trading well under the cash market, technicals and money flow could override fundamentals. Cash sources are split on whether prices will drop again or break the three-week string of losses. If there’s active followthrough selling from Wednesday’s sharp losses in cattle futures, it could convince feedlots to sell hedged cattle at lower prices despite tight supplies. Wholesale beef prices fell sharply on Wednesday, with Choice down $5.56 and Select $1.61 lower, though movement improved to 101 loads.

HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from firming cash fundamentals, though some corrective selling may surface if initial buyer interest is limited given premiums in nearby contracts. Summer-month lean hog futures surged more than $3.00 on Wednesday amid strengthening techincals and the steadily rising cash hog index. August hogs extended Tuesday’s breakout above the neckline of the inverted head-and-shoulders formation that projects to an eventual test of the contract high. That pushed the contract to a $2.77 premium to the CME lean hog index, which is up another 37 cents to $94.68 (as of July 3). The pork cutout value firmed 69 cents on Wednesday.