GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 5 cents lower.
Wheat: SRW and HRS 2 to 4 cents lower; HRW 4 to 8 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat held in relatively tight ranges during quiet overnight trade. Losses were slightly extended after another round of disappointing weekly export sales. Outside markets are price-negative for grains, with crude oil around $1.00 lower and the U.S. dollar index about 275 points higher this morning.
The broad marketplace remains on edge as the U.S. debt-limit situation pushes forward with no solution. House Republican leadership feels confident they can reach a deal with the White House to raise the debt limit and pare back federal spending. Republicans expect the compromise will come together sometime in the next few days. Fitch Ratings placed the U.S. AAA credit rating on “rating watch negative,” a sign of growing unease about the country’s ability to avert a default.
Dozens of ships are unable to reach Ukraine, days after a Black Sea grain deal was extended and the pace of shipments is unlikely to pick up because of slow inspections and other uncertainties, Reuters reported, citing shipping data and sources. Nearly 40 dry bulk vessels were stationary around Istanbul in areas that have been used for inspections by a joint inspection team representing Russia, Ukraine and Turkey as well as the UN, analysis from global trade analytics platform Kpler showed. Shipfix data showed that the shipment size had dropped from around 15,000 MT in April to just over 10,000 MT in May as the uncertain situation led traders to be cautious with bookings.
Export sales for the week ended May 18:
Corn: Net sales reduction of 75,200 MT for 2022-23, down 78% from the previous week and sharply below the four-week average. USDA reported old-crop sales reductions of 331,600 MT to China and 216,700 MT to unknown destinations. New-crop sales totaled 52,100 MT for the week. Traders expected sales of (500,000) to 400,000 MT for 2022-23 and 0 to 300,000 MT for 2023-24. Exports of 1.503 MMT increased 38% from the previous week and 20% from the four-week average.
Soybeans: Net sales of 115,000 MT for 2022-23, up sharply from the previous week but 26% below the four-week average. New-crop sales totaled 1,100 MT. Traders expected (50,000) to 300,000 MT for 2022-23 and 100,000 to 675,000 MT for 2023-24.
Wheat: Net sales reductions of 45,000 MT for 2022-23 and net sales of 245,100 MT for 2023-24. Traders expected (75,000) to 100,000 MT for 2022-23 and 200,000 to 500,000 MT for 2023-24.
CORN: July corn futures continue to rebound off last week’s low and are now trading above the 5-, 10- and 20-day moving averages. Next resistance is the May 8 high at $6.00, with additional resistance in the $6.02 to $6.04 range, where the downtrend from last fall’s highs and the 40-day moving average converge. The 20-day moving average at $5.81 3/4 is near-term support.
SOYBEANS: July soybean futures have formed a bear pennant/flag on the daily chart amid this week’s consolidation around the recent lows. To avoid further technical pressure, bulls must defend the Friday/Monday double-bottom at $13.04 3/4. To negate the bearish formation, the contract must close above $13.48.
WHEAT: July HRW wheat futures continue to pull back amid corrective selling and unwinding of long HRW/short SRW spreads. While the spread is still historically wide, traders have reduced it from more than $2.60 to just under $2.00. Near-term support for July HRW futures is the psychological $8.00 mark. Bulls need a close above the 20-day moving average at $8.30 1/2 to signal the pullback is done.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open higher on followthrough buying after a strong close on Wednesday. June live cattle futures posted a bullish outside day up and flirted with a key reversal. Cash cattle trade got underway with higher prices on Wednesday. Cash sources reported trade as high at $182 live and $286 dressed in northern locations and around $171 in the Southern Plains. Those levels were sharply higher in the northern market, and steady/$1 higher in the Southern Plains. Wholesale beef prices fell $2.44 for Choice boxes but Select firmed $2.51. Movement improved to 133 loads. The Cold Storage Report showed beef stocks in frozen storage at 448.0 million lbs. at the end of April, down 29.8 million lbs. (6.2%) from March, nearly double the five-year average decline of 15.1 million lbs. during the month. USDA reported net beef sales of 18,300 MT for 2023, up 5% from the previous week and 15% above the four-week average.
HOGS: Lean hog futures are expected to open mostly lower. It’s the same song, different verse for hog futures, which are oversold but can’t muster even a modest corrective rebound despite the seasonally firming cash market. June lean hog futures settled at $79.80 on Wednesday, 87 cents below today’s cash index quote (as of May 23). It’s extremely unusual for the June contract to trade below the cash index, especially just three weeks from expiration. As of Wednesday’s close, July hogs held just a modest premium to the cash market. The pork cutout value fell $2.63 yesterday. While movement improved to 342.9 loads, packers are having to cut prices to attract enough demand to keep up with supplies. Pork stocks at 565.5 million lbs. increased 31.6 million lbs. (5.9%) from March compared with the five-year average rise of 16.9 million pounds. USDA reported net pork sales of 29,200 MT for 2023, down 8% from the previous week and 29% below the four-week average. China purchased only 600 MT of pork for the week and took delivery of 4,600 MT.