Ahead of the Open | July 17, 2023
GRAIN CALLS
Corn: 2 to 6 cents higher.
Soybeans: 10 to 15 cents higher.
Wheat: Winter wheat 15 to 20 cents higher; spring wheat 10 to 15 cents higher.
GENERAL COMMENTS: Grain and soy futures traded solidly higher overnight on concerns about U.S. crop weather and Black Sea grain supplies. However, markets backed well off their highs as the overnight session ended. We still expect a solidly higher start, though speculative money flow will determine the degree of gains. Outside markets are mildly negative with crude oil moderately lower and the U.S. dollar index just above unchanged.
The Northern Plains and upper Corn Belt will be drier than normal over the next 10 days to two weeks, with hot temps expected to move in by late this week, increasing crop stress in the region. The lower two-thirds of the Corn Belt, Delta and Southeast will see multiple rain events along with cooler temps this week, though heat is expected to build next week.
Russia formally notified Ukraine, Turkey and the United Nations it was suspending its participation in the Black Sea grain deal. Moscow said the halting of the Black Sea grain deal had nothing to do with a Ukrainian attack on the Crimean Bridge over the weekend and it would return to the agreement as soon as the Russian part of the agreement is fulfilled.
Russia’s grain exporting union says it will continue to meet all contractual obligations. Ukraine previously said it had a Plan B for exports if Russia ended the deal. There is now greater uncertainty with grain movement out of the Black Sea region.
Analysts expect the National Oilseed Processors Association (NOPA) to report June soybean crush totaled 170.6 million bushels. While that would be down 4.1% from May, it would be up 3.6% from June 2022 and a record for the month. Soyoil stocks are expected to total 1.816 billion pounds.
Brazil’s safrinha corn harvest advanced to 36% done as of last Thursday, according to AgRural, though that was behind last year’s 53% clip.
CORN: December corn futures gapped higher overnight. While the gap was filled, bulls still have short-term momentum, with the contract reaching its highest level since June 29. Near-term resistance extends from $5.30 1/2 to $5.37 1/4 – a range that contains the 20-, 40- and 50-day moving averages. Near-term support is in the $5.15 to $5.00 range.
SOYBEANS: November soybean futures gapped higher. While the gap was filled, bulls have the strong upper hand technically, trading well above the short-, intermediate and long-term moving averages. Near-term resistance is at the July 3 high at $13.91 3/4. Near-term support extends from $13.78 to $13.55.
WHEAT: December SRW futures gapped higher overnight and poked above the 20- and 100-day moving averages. The overnight high at $7.08 1/4 is near-term resistance. Above that, resistance would be in the $7.10 to $7.20 range. The overnight gap from $6.84 1/4 to $6.82 1/4 is near-term support.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after a strong finish last Friday that included contract high closes (not intra-day contract highs). There are bullish expectations for cash cattle trade this week after prices firmed late last week as higher prices in the northern market offset steady/weaker values in the Southern Plains. We expect a wide range of prices again this week with the northern market outperforming the Southern Plains, though the overall cash price should work higher. Wholesale beef prices continued to drop, with Choice down 97 cents and Select $3.57 lower on Friday. Packers have slowed slaughter runs but have had to cut into margins amid the falling wholesale prices given tight market-ready supplies.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from strengthening cash fundamentals. The CME lean hog index is up another 74 cents to $101.03 (as of July 13). The pork cutout value jumped $4.65 on Friday to $115.55. As of Friday’s closes, July hog futures, which expire today and are cash settled on Wednesday, held a 94.5 cent premium to the cash index, while the August contract was at a $4.83 discount. Traders remain cautious toward August lean hogs despite the strengthening cash fundamentals, suggesting they expect prices to top during the next month.
