GRAIN CALLS
Corn: Old-crop 2 to 3 cents lower; new-crop 10 to 15 cents lower.
Soybeans: 18 to 28 cents lower.
Wheat: 15 to 20 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat faced active followthrough selling during overnight trade. Traders continue to remove weather premium from the corn and soybean markets given forecasts for improved rainfall chances across the Corn Belt into mid-July. Outside markets could add to the pressure on grain and soy futures, as the U.S. dollar index is more than 400 points higher and crude oil futures are modestly lower.
USDA reported daily corn sales of 170,706 MT to Mexico – 21,340 MT for 2022-23 and 149,366 MT for 2023-24.
A band of scattered rains is moving across the Corn Belt today, with the heaviest amounts falling on northeastern and east-central Iowa overnight and early this morning. The rains are expected to continue across northern Illinois before dissipating. Another band of rains is expected to form in far eastern Nebraska later this morning. Forecast models continue to signal improved rain chances for the Corn Belt into mid-July. World Weather says, “The GFS [American] model may be a bit overboard on two week rain amounts in the heart of the Midwest, but all models today continue to produce an outlook that brings relief to driest areas of the Midwest during the next 10 days to two weeks.”
The probability of Russia’s withdrawal from the Black Sea grain deal in July remains high, although talks continue, Russian RIA news agency reported. Russian officials have repeatedly said Moscow would end the deal after the current extension expires on July 17 if its demands aren’t met. Traders don’t seem to care as Ukraine has signaled it has a “Plan B” for continuing its grain exports if the deal ends.
Stats Canada reported Canadian farmers planted 26.9 million acres to wheat, including 19.5 million acres of spring wheat. That was down modestly from the 27.0 million acres intended to be planted but slightly higher than the 26.5 million acres traders expected. Canadian canola plantings are estimated at 22.1 million acres, up from intentions of 21.6 million acres and the 21.8 million acres traders expected.
CORN: December corn futures sharply extended the steep pullback over the past week. The contract is nearing a 61.8% retracement of the rally from the May low to last week’s high. That level at $5.43 3/4 is bears’ next downside target.
SOYBEANS: November soybean futures dropped below the 38.2% retracement of the rally from the May low to last week’s high overnight and took out several layers of support. Bears’ next target is a 50% retracement around $12.54 1/2.
WHEAT: December SRW futures have nearly retraced half of the rally from the May low to Monday’s high between yesterday and the overnight session. Next support is at $7.00 and then the 50% retracement level at $6.96.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone on followthrough buying after a strong close on Tuesday. But buyer interest is likely to be limited as traders will keep futures at discounts to the cash market. Cash cattle are expected to trade lower again this week. Choice boxed beef prices fell another $3.81 on Tuesday, while Select dropped $1.24. Wholesale prices have been on a steady decline since peaking two weeks ago but Choice boxes are still more than $60.00 above year-ago at this time and at record levels for the date. The strong product market has kept packer margins solidly in the black, which along with the tight supply situation, limits downside risk for the cash cattle market.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from firming cash fundamentals. The CME lean hog index is up another 41 cents to $92.52 (as of June 26). July hogs finished Tuesday $1.605 above today’s cash quote. The pork cutout value firmed 61 cents to $100.16 on Tuesday, the first time in triple digits since last October. The strengthening pork product market has been supported by seasonally declining supplies, but retailers also appear to be gearing up for more pork features after the Fourth of July holiday.