Ahead of the Open | June 21, 2024

Corn, soybeans and wheat each saw corrective buying overnight, though selling pressure increased into the break.

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

GRAIN CALLS

Corn: 1 cent lower to 1 cent higher.

Soybeans: 4 to 6 cents higher.

Wheat: Steady to 2 cents higher.

GENERAL COMMENTS: Corn, soybeans and wheat each saw corrective buying overnight, though selling pressure increased into the break. Each are poised for sharp losses on the week, key will be if bulls can keep prices off this week’s lows. Outside markets are mixed this morning, as front-month crude oil futures are trading near unchanged and near recent highs, while the U.S. dollar index is trading around 150 points higher.

USDA Secretary Tom Vilsack told us on AgriTalk, “I don’t think we’re close to getting a farm bill done until the folks who are negotiating the farm bill are realistic about what’s doable within a constrained resource environment.” He noted GOP farm bill proposals “essentially require a significant amount of additional funding.” He said, “I think there’s an opportunity to creatively use the CCC (Commodity Credit Corporation) in a way that actually does provide some additional resources or capacity. But I don’t think it’s anywhere near $53 billion.” Regarding climate-smart programs as the next revenue stream for farmers, Vilsack said: “We’re beginning to see products that are actually generating value added.” He noted the 45Z tax credit, “which is really the significant tax credit for individual and bundled activities on the climate smart side that will allow us to qualify ethanol that’s produced from those crops to benefit from sustainable aviation fuel. That’s a new opportunity.” Click here to see more.

Used cooking oil (UCO), a feedstock for producing biodiesel and sustainable aviation fuel (SAF), is expected to play a significant role in the aviation industry’s efforts to reach net-zero emissions by 2050. Currently, SAF makes up only 0.2% of jet fuel use, but it is projected to account for 64% of the industry’s net-zero actions by 2050. The U.S. has recognized international certification for Brazil’s compliance with specific sanitary and technical standards, and the Brazilian government will provide certification on the traceability, identity and origin of UCO. This authorization adds another source of UCO to the U.S. market, where imports have increased significantly to support biofuel production. The surge in UCO shipments from China has led some in the U.S. to advocate for limits on these imports. But there are reports out of China that the country is putting more emphasis on SAF production domestically, which could decrease its exports of UCO.

France’s ag ministry rated the country’s soft wheat crop as 62% good or excellent as of June 17, unchanged from the previous week. That remained the lowest rating for the date since 2020.

Export sales for the week ended June 13:

Corn: Net sales of 511,400 MT for 2023-24, down 52% from the previous week and 48% from the four-week average. Increases came primarily from Japan, Colombia and Mexico. Sales came in below expectations from 700,000 MT to 1.2 MMT for 2023-24. Exports of 1.482 MMT were up 19% from the previous week and 13% from the four-week average.

Soybeans: Net sales of 556,500 MT for 2023-24, up 48% from the previous week and 89% from the four-week average. China and Egypt led purchases. Traders expected sales from 375,000 to 850,000 MT for 2023-24. Exports of 341,000 MT were up 58% from the previous week and 27% from the four-week average.

Wheat: Net sales of 589,700 MT for 2024-25. South Korea led purchases, followed by the Philippines and Vietnam. Exports of 363,600 MT. Sales came in higher than expectations ranging from 200,000 to 500,000 MT for 2024-25.

CORN: July corn futures saw modest corrective buying overnight. Bulls are seeking to overcome initial resistance at $4.43 1/4 before tackling the 10-day moving average at $4.47. Support stems from the June 5 low of $4.38 1/4 and is backed by $4.35 3/4.

SOYBEANS: July soybean futures traded higher overnight. July futures are in a wide, volatile range. Resistance stems from $11.75, which capped most losses ahead of Monday’s breakdown. Further buying eyes resistance at $11.85 1/4. Support lies at $11.55, backed by the psychological $11.50 mark, then $11.45 3/4.

WHEAT: July SRW futures posted corrective gains overnight. Prices remain well below the 10-day moving average at $6.03 1/2, which could lead to additional corrective gains. Resistance lies at $5.88 3/4 on the way. Support steams from yesterday’s close of $5.72 3/4, then $5.59 1/4.

LIVESTOCK CALLS

CATTLE: Choppy/higher.

HOGS: Lower.

CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone on continued technical and cash fundamental strength. August futures appear to be consolidating in a bull flag pattern on the daily bar chart. Cash cattle trade has been abysmal so far this week ahead of today’s USDA Cattle on Feed Report, which is expected to show the June 1 feedlot inventory down 1.0% from last year, while May placements are seen declining 1.5% and marketings inching up 0.5%, according to a Reuters poll. Barring a bearish report, cash trade is likely to be higher to end the week. Choice cutout firmed $2.17 to $322.87 Thursday while Select rose $1.14 to $304.40, though movement slowed to 98 loads. USDA reported net beef sales of 14,900 MT for 2024, up 24% from the previous week but down 7% from the four-week average.

HOGS: Lean hog futures are expected to open lower as prices continue to break down technically. After futures consolidated and seemingly broke out higher earlier this week, a weakening cash market took the wind out of bulls’ sails and quickly negated much of the gains seen late last week and Monday. The CME lean hog index is down another 17 cents to $90.55 as of June 19, marking declines in four out of the last five days. Pork cutout firmed a modest 18 cents to $97.85, ending a three-day skid. Gains were led by sharp increases in bellies and ribs, though movement was light at 220.14 loads. USDA reported net pork sales of 21,400 MT for 2024, down 29% from the previous week and 34% from the four-week average.