Ahead of the Open | August 21, 2023
GRAIN CALLS
Corn: 3 to 6 cents higher.
Soybeans: 20-25 cents higher.
Wheat: 5-10 cents lower.
GENERAL COMMENTS: Corn and soybeans both gapped higher overnight, but corn futures struggled to sustain gains. Beans remained strong throughout the overnight session while wheat futures gapped higher but have trended lower since. Ukrainian attacks continue in the Russian mainland, targeting military and export infrastructure as well as the nation’s capital, though attacks do not seem to have much of an effect on price at this juncture. Outside markets are mildly bullish, with front-month crude oil futures $1 higher at $81.70 and the U.S. dollar index mildly weaker. Weather seems to be the current market driver, with price driven by recent hot and dry conditions.
This morning the USDA announced 111,770 MT of corn for delivery to Mexico during the 23/24 marketing year as well as 159,350 MT of soybeans for delivery to unknown destinations for the 23/24 marketing year.
The Pro Farmer Crop Tour begins today with scouts sampling corn and soybean fields across the seven Crop Tour states over the next four days. Follow along with updates on our website and by searching #pftour23 on X (formerly Twitter). Scouts on the eastern leg of the tour are making their way today from Dublin, Ohio to Noblesville, Indiana. Those on the western leg are scouting fields between Sioux Falls, South Dakota, and Grand Island, Nebraska. Look for preliminary route reports from Tour leaders in “Evening Report” and on our website. We’ll release the Tour results for Ohio and South Dakota and stream the nightly results on our site tonight. The Pro Farmer corn and soybean crop estimates will be released Friday at 1:30 p.m. CT. Our “Crops Analysis” and “Livestock Analysis” reports will be replaced with “After the Bell” this week.
The Midwest and is expected to see little to no rain for the next ten days and the same is true for most of the Plains and Delta as well. Temperatures in the central and southern Plains, western Midwest and Delta are expected to remain hot through mid-week before some cooling is expected, says World Weather Inc. Current soil moisture should prevent any major crop stress, though the period of hot and dry weather could cause crops to finish quicker than usual. Rain from Tropical Storm Hilary will reach into Canada’s Prairies during mid-week this week helping to improve topsoil moisture for immature crops in the east, but the southwest may not get a large amount of moisture from the system.
Argentina is expected to start planting their soybean crop soon though the drought has not improved much. World Weather Inc forecasts drought conditions remaining over the coming ten days. Producers are holding onto last year’s drought ridden crop amidst currency risk and another year of poor production would weigh heavily on producers.
CORN: December corn futures gapped higher but struggled to maintain gains into the break. Price struggled to maintain momentum above the 20-day moving average. If bears manage to push lower on the open it would signal a potential exhaustion gap, giving bears the technical advantage. Bulls are looking for consecutive closes above the $5.00 level. Support can be expected at $4.92 then $4.82.
SOYBEANS: November soybean futures were the strongest of the big three overnight, staying near $13.75 resistance. Prices have rallied above the moving averages and are near the June and early July peaks. A daily close above $14.00 would be momentous for bulls, especially as seasonals are historically bearish for August. Support can be expected initially at $13.50 and backed by $13.38.
WHEAT: December SRW futures struggled to maintain last night’s gap higher and failed against initial resistance at the 10-day moving average, currently at $6.43. A daily close above this level would indicate an interim low could be in place, but the path of least resistance remains lower. Support can be expected by last week’s $6.12 low, backed by $6.08 1/4.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open mostly higher after Friday’s potential reverse and the mildly bullish Cattle on Feed report released after Friday’s close. Last week’s cash trade finished strong, though a slight drop from the prior week’s cash average is likely. Wholesale beef prices remain strong, finally finding sustained strength above $300 in Choice cutout. Choice cutout finished $1.97 higher on Friday to $316.11 while Select rose $2.10 to $288.36. This strength will likely give packers confidence to bid higher in the cash market, sending the futures higher as well.
HOGS: Lean hog futures are expected to open with a firmer tone, building off Friday’s strength. Futures surged nearly $3 higher on Friday, negating the recent steep downtrend, though price returned to the downtrend line stemming from the Aug 1 and Aug 8 highs. Sellers may take advantage of this retracement, but steep discounts from the cash index should keep losses moderately in check. Lean hogs were most recently down 71 cents in the tenth straight day of declines. Wholesale prices have seemingly topped as well, falling $3.91 last week, which does not bode well for the futures market.
