GRAIN CALLS
Corn: 2 to 5 cents higher.
Soybeans: 2 to 5 cents higher.
Wheat: SRW and HRW 10 to 15 cents higher; HRS 5 to 10 cents higher.
GENERAL COMMENTS: Bulls controlled price action in the grain markets overnight, though buyer interest eased at the end of the session. Outside markets are price-negative with crude oil down around $1.50 and the U.S. dollar index nearly 350 points higher, so buyer interest could be restricted in grains during daytime trade.
USDA reported daily soybean sales totaling 165,000 MT to Spain for 2022-23.
Ukraine’s Nova Kakhovka dam was damaged in a blast, which will result in reduced water supplies crucial for agriculture in southern Ukraine. The act has been characterized as “ecocide” by an official in Kyiv, implying intentional environmental destruction. While crops weren’t directly at risk, wheat prices surged. The dam’s destruction “looks like a big escalation with dire consequences and huge headline risk,” SovEcon Managing Director Andrey Sizov tweeted.
USDA rated 64% of the corn crop “good” to “excellent,” down five points from the previous week and three points lower than traders expected. USDA initially rated 62% of the soybean crop “good” to “excellent,” three points lower than traders expected. The first spring wheat crop condition rating showed 64% of the crop as “good” to “excellent,” two points lower than traders expected. 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 dropped 10.9 points to 365.7. Ratings dropped in each of the top five corn production states – Iowa, Illinois, Nebraska, Minnesota and Indiana. The CCI rating stood 16.9 points below year-ago at this time. USDA’s initial soybean conditions equated to a CCI rating of 357.8, down 13.1 points from last year, though that was a week later. The first spring wheat CCI rating of 370.2 stood 16.8 points above last year, though that too was one week later.
World Weather Inc. says, “Midwest cooling and expected rainfall during the coming week to 10 days will offer some relief to recent drying and crop moisture stress. A full restoration of soil moisture is not likely and many areas will remain on a path for below-average rainfall this month, but the timely rain and cooling should benefit many crops.”
Crop Consultant Dr. Michael Cordonnier lowered his corn yield by 1 bu. to 179 bu. per acre, citing a drier bias across the Corn Belt. He now forecasts corn production at 14.94 billion bushels. Cordonnier left his soybean yield and production forecasts at 52 bu. per acre and 4.53 billion bu., respectively, noting dry conditions in early June do not necessarily translate to lower yields if weather turns more favorable later in the growing season.
Australia’s wheat production is forecast to plunge 34% from the record 2022-23 crop to 26.2 MMT, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Planted area is forecast 2% lower than last year, while reduced yields are likely amid the development of El Niño. Australia’s weather bureau said there was a 70% chance of El Niño developing, typically associated with hotter, drier weather in Australia.
CORN: July corn futures posted an inside day up overnight after Monday’s corrective losses. Monday’s high at $6.14 looms as near-term resistance, followed by the 100-day moving average near $6.24. Near-term support extends from $6.00 to the 10-day moving average near $5.95.
SOYBEANS: July soybean futures are pivoting around last Friday’s closing level. Near-term resistance stands at Monday’s high of $13.61 1/2, followed by previous support at $13.83 3/4. Near-term support extends from $13.50 to $13.44.
WHEAT: July SRW futures stopped right around the downtrends drawn off both the fall highs and off the winter/spring highs overnight, setting today up as a key technically. Closes above both downtrends would be technically bullish and likely encourage fresh chart-based buying. Rolling over after testing these key resistance levels would suggest the upside is about tapped out without fresh bullish news.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed tone. While cash fundamentals are fully bullish and futures are trading well below cash prices, the market is heavily overbought. That leaves the market susceptible to corrective selling as traders wait on this week’s cash cattle trade to develop. Cash cattle trade averaged $182.03 last week, up $4.06 from the previous week and a record high. While packers purchased a large amount of cattle the past two weeks, the first couple weeks of June are typically some of the largest slaughters of the year. Given tight market-ready supplies, another increase in cash prices is possible – even with fresh contract supplies available – though packers will likely try to string out cash negotiations as long as possible in hopes of getting feedlots to move animals at lower prices. Wholesale beef prices jumped $4.26 for Choice and $5.80 for Select on Monday, though movement was rather light at 98 loads.
HOGS: Lean hog futures are expected to open with a mostly firmer tone. Monday’s pullback narrowed premiums summer-month futures hold to the cash market without doing any technical damage. The CME lean hog index is up 69 cents to $81.21 (as of June 2), the highest level since mid-December. This year’s seasonal rally in the cash hog market was delayed, but appears to be picking up steam as market-ready supplies gradually tighten. The pork cutout value firmed $4.34 on Monday, largely driven by a $24.51 surge in primal belly prices. Movement was solid at 295 loads.