GRAIN CALLS
Corn: 8 to 12 cents higher.
Soybeans: 8 to 12 cents higher.
Wheat: Winter wheat 6 to 10 cents higher; spring wheat steady to 2 cents higher.
GENERAL COMMENTS: Corn and wheat futures were supported overnight by Russia’s attack on the Ukrainian grain port at Odesa. Soybeans also traded higher. The overnight strength came despite bigger-than-expected improvements in corn, soybean and spring wheat crop condition ratings from USDA Monday after markets closed. Outside markets are quiet this morning and unlikely to provide any price direction for grains.
Russia struck Ukraine’s port of Odesa with missiles and drones on Tuesday, a day after pulling out of the Black Sea grain deal. Russia called the attack on the port “mass revenge strikes” in retaliation for attacks by Ukraine that knocked out its road bridge to the occupied Crimean Peninsula a day earlier. The Kremlin also warned shipping grain out of Ukrainian Black Sea ports without security guarantees from Russia would carry risks because Ukraine uses those waters for military activities.
USDA raised its “good” to “excellent” ratings two points for corn to 57% and four points for soybeans to 55%. Ratings for both crops remain below average. On the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop improved 5.3 points to 349.9, though that was still 13.4 points (3.7%) below year-ago. Condition improvements were noted in 11 of the top 18 corn production states. The soybean CCI rating rose 7.6 points to 339.3, though that was still 14.2 points (4.0%) below last year on this date. Of the top 18 soybean production states, 15 improved. The two highest producing corn and soybean states, Iowa and Illinois, led the crop ratings gains.
USDA raised its “good” to “excellent” rating for soybeans four points to 51%. The spring wheat crop jumped 10.9 points on the CCI to 339.2, though that was still 37.8 points (10.0%) below last year at this time. Top producer North Dakota improved 10.1 points, while modest changes in the other five states were virtually offsetting.
World Weather Inc. notes, the morning weather models reduced rainfall chances from Illinois through Iowa and southern Wisconsin to the Dakotas and parts of Minnesota. Rains over the next two weeks will favor the southern two-thirds of the Corn Belt, Delta and Southeast. Temps are still expected to rise late this week in the Northern Plains and next week across the Corn Belt.
CORN: December corn futures rebounded overnight after a poor close on Friday. Monday’s spike high at $5.26 1/2 stands as formidable near-term resistance. Near-term support is in the $5.04 to $5.00 range.
SOYBEANS: November soybean futures poked above the July 3 high at $13.91 3/4 overnight. Next resistance is the psychological $14.00 mark and then the February high at $14.02. Near-term support is in the $13.78 to $13.70 area.
WHEAT: December SRW futures remain in the broad short-term consolidation range outlined by support at $6.22 and resistance at $6.89 1/4.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mixed tone this morning. While underlying cash fundamentals are strong, there is likely to be an extended period of cash cattle negotiations this week. Plus, traders will start to even positions ahead of Friday afternoon’s Cattle on Feed and Cattle Inventory Reports. The combination of rising cash cattle prices and falling wholesale beef values dropped beef cutting margins into the red for the first time since mid-December, according to Hedgersedge.com. Cash cattle prices are expected to firm again this week after rising $2.21 to an average of $184.27 last week. Choice beef prices firmed 84 cents on Monday, while Select dropped 87 cents. Eroding margins are causing some plants to further reduce kill runs to manage tight market-ready cattle supplies, which should help the product market put in a seasonal bottom.
HOGS: Lean hog futures are expected to open mostly lower after bearish reversals on Monday. But seller interest should be limited as August hogs take over lead-month status at a notable discount to the rising cash index. The CME lean hog index is up another 57 cents to $101.60 today (as of July 14). August hogs finished yesterday $6.825 below that level. The pork cutout value took a breather from the recent rally, dropping $2.79 to start the week. While yesterday’s activity in the cash and product markets tightened packer margins, they remain slightly in the black.