Ahead of the Open | July 25, 2023
GRAIN CALLS
Corn: 8 to 12 cents lower.
Soybeans: 12-16 cents lower.
Wheat: SRW wheat 8-12 cents lower; HRW wheat steady; spring wheat steady to 2 cents lower.
GENERAL COMMENTS: Conditions slightly worsening was not enough to bolster additional buying following yesterday’s explosion higher. SRW wheat spiked higher to $7.77 in early trading last night but has since pared gains and is leading the wheat complex lower. Outside markets are largely quite, though the U.S. dollar index is trading at a two week high.
Russia continues to maintain that they will not return to the grain deal unless restrictions are lifted on Russian grain and fertilizer exports. Kremlin spokesman Dmitry Peskov said a letter from U.N. Secretary General Antonio Guterres to Russian President Vladmir Putin was not enough to get Russia back into the grain deal. A U.S. senior Treasury official will highlight Washington’s efforts in facilitating Russian exports during a visit to Kenya and Somalia in an effort to convince Russia that it’s departure from the grain deal will hurt African states, though Russia has been strengthening ties with African ally Mali by supplying wheat to the nation.
USDA left its corn condition ratings unchanged at 57% “good” to “excellent” and lowered soybeans one point to 54% “good” to “excellent”. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop fell 1 point to 349, still 8.17 points (2.3%) below a year ago. Conditions worsened in 11 of the top 18 corn production states. The soybean CCI fell 1 point to 338.3, still 12.4 points (3.5%) below a year ago. Conditions worsened in 9 of the 18 top soybean production states. The top two production states, Iowa and Illinois, saw conditions improve despite the falling national average.
USDA lowered its “good” to “excellent” rating for spring wheat two points to 49%. Spring wheat fell 2.8 points on the CCI to 336.4. This is still 36.1 points (9.7%) below a year ago. Top producer North Dakota fell slightly, but conditions in each of the six states fell.
CORN: December corn futures faced corrective selling as price has remained within Monday’s session. $5.50 will be key support for bulls, loss of which would point to a test of $5.33. Bulls are aiming for a rebound to yesterday’s intraday high of $5.72 1/4 before testing resistance at $5.80.
SOYBEANS: November soybean futures traded lower overnight but price remains within yesterday’s session. Price remains in an uptrend and a sell to the 10-day moving average at $13.89 is not out of the question, though $14.00 will act as firm support on the way. Bulls are targeting yesterday’s for-the-move high at $14.35 before additional resistance at $14.50.
WHEAT: December SRW futures spiked higher on the overnight open but have since traded lower with SRW leading losses. Price is currently around the June highs which will act as an important pivot, trade higher will encounter resistance at last night’s spike high at $7.77 1/4 then $8.00. Further selling will encounter support at $7.41 1/2 with $7.50 support on the way.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open higher after yesterday’s bullish wholesale prices which saw Choice cutout rising $1.42 to $304.16 and Select rising 26 cents to $276.99. Cash prices remain well above futures, which should provide solid fundamental support. Trade may be choppy ahead of the Cold Storage Report out this afternoon. Cash cattle prices are expected to remain firm this week after rising $1.92 last week to $186.19.
HOGS: Lean hog futures are expected to open mostly lower after continued downside yesterday. The futures market appears to be undergoing corrective selling despite the continues strength in the cash index, which rose another 56 cents to $104.60 as of July 21. Wholesale prices remain quite strong, led by bellies which have over doubled in price in the month of July. Overall, wholesale price rose $1.96 on Monday, led by a $9.30 jump in bellies. While technical selling may commandeer futures today, the downside should be limited in August futures by the steep discount to the cash index.
