Ahead of the Open | June 12, 2024

Wheat led weakness overnight, facing persistent selling pressure. Corn and soybeans traded higher, though continue to trade largely sideways ahead of today’s USDA reports.

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: 3 to 5 cents higher.

Wheat: SRW 10 to 12 cents lower; HRW 13 to 15 cents lower; HRS 10 to 12 cents lower.

GENERAL COMMENTS: Wheat led weakness overnight, facing persistent selling pressure. Corn and soybeans traded higher, though continue to trade largely sideways ahead of today’s USDA reports. Outside markets were volatile this morning following inflation data from BLS. Bond futures shot higher, indicating expectations of lower interest rates sooner than later, as lower inflation could give the Federal Reserve confidence to slash short-term interest rates. Lower bond yields let to sharp losses in the U.S. dollar index, which is currently trading around 750 points lower. Meanwhile, front-month crude oil futures are trading solidly higher and near two-week highs.

USDA reported daily sales of 106,000 MT of soybeans for delivery to China during the 2023-24 marketing year, the second consecutive day of daily soybean sales to China.

The Bureau of Labor Statistics released the highly anticipated Consumer Price Index (CPI) for May this morning, which showed inflation coming below expectations. CPI slowed to 3.3% on an annual basis in May, below 3.4% in April and forecasts of 3.4%. The monthly rate of 0.0% was the lowest since July 2022. Core CPI slowed to 3.4% annually, lower than expectations.

USDA’s reports at 11:00 a.m. CT will feature updated old- and new-crop balance sheets and the second winter wheat production estimates. For 2023-24 ending stocks, analysts expect corn at 2.009 billion bu. (2.022 billion bu. in May), soybeans at 346 million bu. (340 million bu. in May) and wheat at 688 million bu. (unchanged from May). For 2024-25 ending stocks, analysts expect corn at 2.079 billion bu. (2.102 billion bu. in May), soybeans at 448 million bu. (445 million bu. in May) and wheat at 778 million bu. (766 million bu. in May). Analysts expect winter wheat production of 1.298 billion bu. (1.278 billion bu. in May), including 716 million bu. for HRW (705 million bu. in May), 350 million bu. for SRW (344 million bu. in May) and 229 million bu. for white winter (unchanged from May).

The Fed will keep interest rates unchanged following the conclusion of its two-day monetary policy meeting at 1:00 p.m. CT. Market focus will be on the so-called “dot plot” economic projections from Fed officials and Chair Jerome Powell’s press conference as traders try to determine when rate cuts will begin.

Senate Republicans, led by ranking member John Boozman (R-Ark.), proposed a $1.51 trillion farm bill framework that seeks a 15% average increase in crop reference prices, aimed at providing additional price support for farmers. The framework, while comprehensive, will not be officially introduced by Republicans, who are the minority in the Senate. This proposal contrasts with Senate Democrats’ plan, which includes a 5% increase in crop reference prices. Other key differences include the GOP’s push to tie food-aid benefits more closely to inflation and redirect climate change funds to general conservation. Democrats label these priorities as “poison pills,” complicating the likelihood of passing the bill before the end-of-year true deadline. Click here for more details. Senate Ag Chair Debbie Stabenow (D-Mich.) and USDA Secretary Tom Vilsack blasted the Senate GOP farm bill framework, saying it “follows the same flawed approach” as the House farm bill.

CORN: July corn futures have traded in a tight range the past week, awaiting a catalyst. Bulls are seeking to overcome resistance at $4.53, the 40-day moving average, which is backed by resistance at yesterday’s high of $4.56 1/4, then downward trendline resistance at $4.62. Support stems from $4.49, which has attracted a significant amount of volume in recent days, then last Thursday’s low of $4.44 1/4.

SOYBEANS: July soybean futures’ range continues to tighten on the daily bar chart. Reports today could be the catalyst needed to break prices out of the range. Resistance stands at the 10-day moving average, currently at $11.91 1/4, which is reinforced by resistance at the psychological $12.00 mark. Support comes in at $11.75, which has limited most of the downside in the past two weeks, which is backed by $11.63.

WHEAT: July SRW futures gave up a significant portion of Tuesday’s gains overnight. Bulls are looking to overcome initial resistance at $6.26 1/2, which is backed by the 200-day moving average at $6.31 3/4, which capped gains on Tuesday. Support stems from yesterday’s low of $6.05 1/2, with backing from $5.99 1/4, then $5.88 3/4.

LIVESTOCK CALLS

CATTLE: Choppy/higher.

HOGS: Choppy/lower.

CATTLE: Live cattle futures and feeders are expected to open with a firmer tone on strengthening cash fundamentals. Cash cattle trade has had a slow start to the week, leaving little guidance for futures. Meanwhile, wholesale beef prices have been quite strong, pushing packer margins back into the black. Choice cutout was up 79 cents to $318.21 Tuesday, a fresh for-the-move high but still below year-ago when prices were pushing to the second highest level on record. Select fell 42 cents to $300.62 Tuesday. Movement totaled 144 loads, signaling there’s still strong retailer demand despite higher prices.

HOGS: Lean hog futures are expected to open with a mostly weaker tone as prices continue to erode technically, though corrective buying could limit losses after the open. The CME lean hog index is down another 20 cents to $91.32 as of June 10, marking the fourth straight daily decline, though losses have been limited in that timeframe. Meanwhile, pork cutout scored a fresh for-the-move high, rising $3.24 to $103.66. Gains were driven by a $16.08 surge in primal bellies, though loins and ribs also posted strong gains. Movement improved to 327.4 loads, impressive given higher prices.