GRAIN CALLS
Corn: 8 to 12 cents lower.
Soybeans: 8 to 15 cents lower.
Wheat: SRW 10 to 15 cents lower; HRW 2 to 4 cents higher; HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn, soybean and wheat futures faced followthrough selling overnight, while HRW and spring wheat traded mildly firmer amid crop concerns. The U.S. dollar index is around 350 points higher this morning, which will add to pressure on most grain/soy markets.
USDA reported daily old-crop corn sales cancellations of 272,000 MT to China.
The Black Sea grain deal is set to be extended, with Russia agreeing to stay in the pact for now, Turkish officials told Bloomberg. An announcement will reportedly be made today, though length of any extension is not known at this time. Russia’s RIA Novosti news agency reported talks on the deal were continuing and that a decision sometime today could not be ruled out. The last ship left a port in Ukraine on Wednesday under the current Black Sea grain deal. Reuters reported a Turkish source said there was a high probability of the deal being extended. Cogs are turning... stay tuned.
On Day 1 of the Wheat Quality Council’s HRW wheat tour, scouts found an average yield of 29.8 bu. per acre on samples taken from central and northern Kansas, down from 39.5 bu. along the same routes last year and the 2017-22 average of 43.4 bu. per acre. Besides drought impacts, the tour found wheat in north-central Kansas suffered more damage than expected from cold winter weather and a couple frost/freeze events. Separately, state wheat associations pegged wheat production at 30 million bu. in Nebraska (up from 26.2 million bu. last year) and 54 million bu. in Colorado (up from 35.8 million bu. last year). Scouts will sample fields in western Kansas today on routes from Colby to Wichita.
World Weather Inc. says, “U.S. Midwest, Delta and southeastern states have nearly ideal soil moisture and weather will continue to be well mixed with timely rainfall and seasonable to slightly warmer than usual temperatures expected. Warming in late May and early June will accelerate drying rates in some areas and that should be monitored.”
CORN: July corn futures are leaning on support at this month’s low of $5.69 1/4. Additional support would be in the $5.64 to $5.49 range. Near-term resistance extends from the 5-day moving average at $5.82 1/2 to the 10-day average at $5.87 1/2.
SOYBEANS: July soybean futures further broke down technically overnight after plunging below the March low on Tuesday. Next support is the psychological $13.50 level. The March low at $13.83 3/4 is near-term resistance. The contract is short-term oversold, but momentum and the path of least resistance is down, so additional near-term pressure is possible.
WHEAT: July HRW wheat futures remain bullish technically, consolidating on top of previous resistance at the February high. The overnight high of $9.15 3/4 will serve as initial resistance, with additional resistance in the $9.20 to $9.25 area. Near-term support extends from $8.94 1/4 to $8.80 1/4. July SRW wheat remains technically bearish. The July HRW/SRW spread is historically wide at over $2.60.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: More choppy trade is expected in live cattle futures as traders wait on cash cattle trade to develop. Only light trade has been reported so far this week – not enough to establish a price trend. Opinions remain split on whether cash prices will ultimately end up higher or lower for the week. Meanwhile, Choice boxed beef prices fell another $2.51 on Tuesday to $299.47. That’s the first time the Choice cutout has been below $300.00 since April 12. Movement improved to 136 loads on the day, but packers are having to lower prices to encourage demand, despite tight supplies, signaling retailers remain selective buyers.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on followthrough buying after another strong close in summer-month contracts on Tuesday. While technical momentum is starting to swing up a little and the cash market is firming, we doubt traders will actively extend the premiums futures hold to the cash index. The CME lean hog index is up 67 cents to $77.17 (as of May 15) as it continues the seasonal climb. June hogs extended their premium to today’s cash index to $10.03 on the close yesterday. The pork cutout value fell 63 cents on Tuesday due mostly to a $7.83 decline in primal belly prices. The lower prices encouraged stronger retailer buying, however, as movement improved to 362.5 loads. Packers continue to struggle to push the pork cutout value above the mid-$80.00 range despite being cheaply priced compared to beef as supplies are stronger than demand.