GRAIN CALLS
Corn: 8 to 12 cents lower
Soybeans: 18 to 22 cents lower
Wheat: 10 to 15 cents lower
GENERAL COMMENTS: Grain and soy futures faced heavy selling pressure overnight after low-range closes on Monday. The selling overnight was part of a broader risk-off trade in the commodity sector. Crude oil futures are more than $4 lower this morning and below $100. The U.S. dollar index reached a new 20-year high overnight and is at parity with the euro for the first time in nearly two decades. The euro has dropped around 20% over the past 14 months due to economic concerns. The last time the dollar and euro were at parity, the euro eventually dropped below 90.00 in 2000.
USDA’s updated balance sheets in this morning’s Supply & Demand Report will reflect changes to old-crop demand forecasts based on June 1 stocks and its new-crop planted acreage estimates. USDA will also release its first all-wheat production estimate, including the first survey-based forecasts for other spring wheat and durum. The average pre-report estimates for old-crop ending stocks are 1.488 billion bu. for corn and 208 million bu. for soybeans. Old-crop wheat ending stocks were set at 660 million bu. by June 1 stocks. For new-crop ending stocks, the average pre-report estimates are 1.442 billion bu. for corn, 211 million bu. for soybeans and 638 million bu. for wheat. All-wheat production is expected to come in at 1.745 billion bu., with winter wheat at 1.186 billion bu., other spring wheat at 458 million bu. and durum at 63 million bushels. Click here for details.
U.S. weather is still a little tenuous with erratic rainfall and areas of net drying expected, according to World Weather Inc. It says hot weather and limited rain will impact the Central and Southern Plains over the next two weeks with the hottest conditions coming later this week and during most of next week with daily highs over 100 degrees Fahrenheit. The western U.S. Corn Belt will be most at risk of expanding heat and dryness next week with Missouri, Kansas, Nebraska, southwestern Iowa and South Dakota expecting hot temperatures and little to no rainfall. Pockets of eastern Midwest dryness will persist over the next couple of weeks, but rain is expected from the eastern Dakotas through southern Minnesota to parts of Ohio and northern Indiana later this week.
USDA’s corn crop condition ratings basically held steady, while the soybean crop dropped a point and spring wheat improved four points. On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 1.1 points to 365.2, though that was still 3.6 points below the five-year average for the second week of July. The soybean crop improved 1.5 points to 356.4, which was a modest 0.8 point above average. The spring wheat crop improved 7.2 points on our CCI to 375.8, which was 42.0 points above the five-year average for the date. The spring wheat crop is behind in development, but after a slow start, it’s rated relatively strong. Click here for details.
CORN: December corn futures filled Monday’s 1/4 cent gap on the daily chart overnight and extended losses from that level. But the contract found mild buying around the 10-day moving average near $6.17. The overnight low of $6.13 1/2 is near-term support that if violated, would open the downside to the psychological $6.00 mark.
SOYBEANS: November soybean futures overnight filled the 2-cent gap left on the daily chart yesterday and extended losses. The overnight low of $13.69 1/4 is near-term support that bulls must defend to avoid a potential drop to test last week’s low at $13.02 1/2.
WHEAT: December SRW wheat futures tried to work higher early in the overnight session but ran out of buyer interest at the 10-day moving average near $8.79 1/2. The overnight low at $8.51 is near-term support.
LIVESTOCK CALLS
CATTLE: Steady/weaker
HOGS: Steady/weaker
CATTLE: Cattle futures posted bullish reversals on Monday amid corrective buying from funds and commercial short-covering. Typically, commercial willingness to cover shorts or add new long positions is a bullish sign for the market. But macroeconomic concerns remain a headwind for the market. If the market opens higher on followthrough buying from the strong close on Monday, we doubt the strength will persist unless outside pressures ease. Boxed beef prices firmed on Monday, with Choice up 25 cents and Select $1.15 higher. Movement was relatively light at 113 loads. With fill-in buying likely complete after the July 4 holiday and a typically lighter demand period ahead, retailers are likely to be selective buyers. Last week’s cash cattle price averaged $144.35, down $1.81 from the previous week. Initial expectations are for steady to weaker cash prices this week.
HOGS: July lean hog futures may be supported by the rising cash index, though the lead contract already carries a premium. The CME lean hog index is up another 81 cents today (as of July 8) to $111.77. Deferred hogs faced pressure from macroeconomic concerns yesterday and that could weigh on those contracts again today as commodities are broadly lower, the U.S. stock market is poised to open lower and the U.S. dollar index is firmer. The pork cutout value firmed 40 cents on Monday as declines in ribs and hams were more than offset by gains in the other cuts. Movement was solid at 330.3 loads.