Ahead of the Open | June 10, 2024

Corn and soybeans rebounded from Friday’s losses overnight while wheat continues to face sharp selling pressure.

Pro Farmer's Ahead of the Open
Pro Farmer’s Ahead of the Open
(Pro Farmer)

GRAIN CALLS

Corn: 2 to 4 cents higher.

Soybeans: 4 to 6 cents higher.

Wheat: SRW 6 to 8 cents lower; HRW 11 to 13 cents lower; HRS 7 to 9 cents lower.

GENERAL COMMENTS: Corn and soybeans rebounded from Friday’s losses overnight while wheat continues to face sharp selling pressure. Outside markets are mixed this morning as front-month crude oil futures continue to bounce from last week’s lows and the U.S. dollar index is sharply higher and trading at the highest mark in four weeks.

Brazil’s safrinha corn harvest reached 10.4% done as of last Thursday, according to AgRural, well ahead of 2.2% for that date last year. Yields remain favorable in Mato Grosso and Goiás, but were impacted by dry weather in Paraná, Mato Grosso do Sul, São Paulo and Minas Gerais.

The Corn Belt, Delta and middle Atlantic Coast states may experience restricted rainfall over the next 10 days, though a tropical disturbance in Florida could impact weather in these regions, according to World Weather Inc. Corn Belt temperatures will be seasonable with a slight cooler bias this week before turning a little warmer than normal. The Plains will see scattered showers and thunderstorms this week.

Ukraine’s 2024 grain production is forecast to fall 7.0 MMT (11.7%) from last year to 52.8 MMT, analyst APK-Inform said, including 26.8 MMT of corn, 20.0 MMT of wheat and 4.5 MMT of barley. APK-Inform’s forecast is close to the ag ministry’s 52.4 MMT projection. APK-Inform projects 2024-25 grain exports 36.2 MMT, down 12.9 MMT (26.2%) from the current marketing year. New-crop exports are expected to include 21.3 MMT of corn, 12.7 MMT of wheat and 1.8 MMT of barley.

The National Oilseed Processors Association (NOPA) revised its April U.S. soybean crush estimate to 169.436 million bu., up from its previous estimate of 166.034 million bushels. The revised April crush was down 13.7% from the record 196.406 million bu. in March and down 2.2% from 173.232 million bu. in April 2023. Inaccurately reported soy processing data from Indiana prompted the revision, NOPA said. Soyoil stocks among NOPA members as of April 30 were revised to 1.832 billion lbs., from the previously reported 1.755 billion lbs., down 1% from the 1.851 billion lbs. on hand at the end of March.

The Federal Crop Insurance Corporation (FCIC) Board recently approved an increase in the subsidy rate for the Enhanced Coverage Option (ECO), effective from the 2025 insurance year starting after July 1, 2024. The subsidy rate for ECO will rise from 44% to 65%, aligning it with the Supplemental Coverage Option (SCO) endorsement. This change, irrespective of current farm bill discussions, aims to boost interest in ECO by lowering coverage costs. ECO offers additional county-based shallow-loss coverage on top of existing multi-peril revenue or yield policies and/or SCO endorsements, covering losses from 90% or 95% of a county’s expected revenue for the insured crop. ECO cannot be purchased with the Stacked Income Protection Plan (STAX) for cotton but can be combined with the Agriculture Risk Coverage (ARC) program, provided no SCO endorsement is also purchased.

CORN: July corn futures saw resurgent strength overnight. Initial resistance stems from Friday’s high of $4.54 1/4, which coincides with 40-day moving average resistance. Additional resistance lies at $4.56 1/2, then $4.60. Meanwhile, bulls are seeking to hold support at $4.50 then $4.43 on resurgent selling pressure.

SOYBEANS: July soybean futures traded modestly higher overnight. Bulls are seeking to overcome resistance at $11.91 3/4 then the psychological $12.00 mark. Support stems from Friday’s low of $11.74 1/4 then $11.63.

WHEAT: July SRW futures continue to show relative weakness. Prices have closed lower for eight consecutive sessions. Bulls are seeking to overcome initial resistance at $6.33 1/4 on corrective buying efforts, with further resistance standing at $6.43 1/2. Support stems from Friday’s low of $6.18 1/4 then the psychological $6.00 mark.

LIVESTOCK CALLS

CATTLE: Choppy/higher.

HOGS: Choppy/higher.

CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone on robust cash fundamentals. Wholesale beef prices firmed 54 cents for Choice and 31 cents for Select on Friday, while movement totaled 119 loads. After dropping last Wednesday, wholesale beef prices bounced back the final two days last week, helping support packer cutting margins, which are estimated to be in the black for most plants. Strengthening margins are likely to limit the losses seen in the cash cattle market while steep discounts in futures should continue to limit selling pressure as well, though traders maintain a pessimistic outlook for the summer despite continued consumer demand in the wake of record beef prices.

HOGS: Lean hog futures are expected to open with a mostly firmer tone on corrective buying efforts. After falling sharply early last week, corrective buying efforts limited further selling pressure in the latter half of the week. As futures modestly rebounded, the CME lean hog index once again stalled and is down 17 cents to $91.75 as of June 6. June lean hog futures, which expire on Friday and are settled against the index on June 18, ended Friday at a 77.5-cent premium to the index. July lean hog futures held a $1.75 premium. Pork cutout ended Friday 22 cents higher to $100.91. While cutout continues to trend higher, the upside has largely been capped much above $103.00.