GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents lower.
Wheat: Winter wheat 1 to 3 cents lower; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each saw corrective buying most of the overnight session, though selling pressure increased into the break. Positioning is likely to drive trade ahead of Friday’s reports in the next few days. Outside markets are mixed this morning, as front-month crude oil futures are trading modestly higher and the U.S. dollar index continues to extend to the upside, currently around 400 points higher.
Sea surface temperatures (SSTs) in the central Pacific have been cooling since December, though the rate of cooling declined in June. The Australian Bureau of Meteorology says climate models suggest SSTs in the central tropical Pacific are likely to continue to cool for at least the next two months. Four of 7 models suggest SSTs are likely to remain at neutral ENSO levels, and the remaining 3 suggest the possibility of SSTs at La Niña levels. The bureau’s ENSO Outlook is at La Niña Watch due to early signs that an event may form in the Pacific Ocean later in the year.
The ongoing dispute between the U.S. and Mexico over genetically modified (GM) corn imports has reached a critical juncture, with Mexico arguing that rising levels of U.S. white corn exports undermine Washington’s claims that Mexico’s restrictions on genetically engineered corn are harming trade. This dispute is being addressed under the United States-Mexico-Canada Agreement (USMCA). The other factor in the dispute that bears watching is the incoming Mexican administration. The new president is viewed as being more favorable toward GMOs even though she’s from the same party as the previous president who issued the decree to ban GM corn. A decree like the one deployed in Mexico could easily be reversed or removed by a subsequent administration.
The Iowa Utilities Board approved the Summit Carbon Solutions pipeline on Tuesday, allowing the company to use eminent domain to acquire land. Construction is slated to begin next year, aiming for operation by 2026. The pipeline will transport liquified carbon dioxide from ethanol plants in Iowa and neighboring states to North Dakota. The approval is contingent on securing necessary permits in South Dakota and North Dakota. The pipeline will span over 2,000 miles, including nearly 700 miles in Iowa, with 75% of the Iowa route’s landowners signing voluntary easement agreements. However, the project has faced significant opposition from farmers, environmentalists and safety advocates.
The Midwest should see a favorable mix of rain and sunshine over the next ten days, says World Weather Inc. The Delta and southwestern states and the southern Plains will experience limited rainfall and temperatures will be hot to warm at times, says the forecaster.
CORN: December corn futures saw modest corrective buying overnight. Initial resistance stems from the overnight high of $4.47 and is backed by the psychological $4.50 mark. Support lies at $4.41 with additional backing from $4.35.
SOYBEANS: November soybean futures saw corrective gains most of the overnight session before facing selling pressure into the break. Initial resistance stands at $11.19 1/2 while further buying seeks to overcome the 10-day moving average at $11.29 1/2. Support stems from $11.07 then the psychological $11.00 mark.
WHEAT: December SRW futures saw modest corrective gains overnight. Some continued profit-taking is possible given heavily oversold conditions. Significant resistance stands at the psychological $6.00 mark. Bulls are seeking to keep prices above support at $5.79.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone, driven by continued strength in cash fundamentals. Cash cattle trade has been light so far this week at modestly weaker prices from last week in Iowa, with trade averaging $195.00. Wholesale beef prices continue to grind higher, as Choice cutout firmed 75 cents to $323.39 and Select rose 19 cents to $305.26 Tuesday. While cutout continues to firm, it has not seen the rapid increase that cash cattle prices have seen in the last two weeks. Still, packer cutting margins remain in the black, which could continue to support cash cattle prices, though cash sources expect steady prices at best this week.
HOGS: Lean hog futures are expected to open with a modestly weaker tone amid continued weakness in cash fundamentals. Weakening cash fundamentals are weighing on futures and signaling the market posted an unusually early seasonal top this year. August futures edged higher on Tuesday though finished nearer session lows. Prices have remained above Monday’s low at $86.275, which is a significant technical mark that bulls will try to keep prices above today. The CME lean hog index is down a nickel to $89.85 as of June 24, the seventh decline in the last eight days and the lowest value since April 10. Pork cutout fell $2.52 to $95.31 as all cuts except butts posted losses, though bellies saw the steepest decline.