GRAIN CALLS
Corn: 2 to 6 cents higher.
Soybeans: 1 to 4 cents higher.
Wheat: unchanged to 14 cents higher.
GENERAL COMMENTS:
Grain and soybean futures firmed late in the overnight session after USDA’s weekly crop condition ratings fell short of trade expectations. Dry soils in the Northwest Corn Belt remain a concern, and July outlooks indicate a return of hot weather in the Midwest. In other markets, the dollar index is firmer, while WTI crude oil futures were up about 0.5% and near 2 1/2-year highs.
The first half of July holds potential for a small insurgence of heat to briefly move through the Midwest as a high-pressure ridge retreats from the Prairies, according to World Weather Inc., but the heat should only last a day or two. The weather watcher does not expect a solid heat wave to impact the eastern Plains or western Corn Belt until the latter part of July and more likely the last 10 days of the month.
Crop consultant Michael Cordonnier made no change to his corn harvest estimate for Brazil of 90 MMT, but his bias is neutral to lower with the coldest air of the season moving in. A frost/freeze in western and northern Parana and southern Mato Grosso do Sul would further damage the country’s safrinha corn crop with late-planted crops still pollinating and filling grain.
Cordonnier maintained his 177.5 bu. per acre U.S. corn yield estimate this week, and his bias is neutral to lower. He reports rains over the weekend from eastern Kansas to southern Michigan was beneficial outside of the flooded areas, as it comes just a few weeks before pollination. In areas dealing with flooding, soybeans are more likely to be impacted than corn. Cordonnier says that if the forecast for hotter, drier weather in July verifies, “we may look back at this past weekend as a giant “missed opportunity” for the corn crop in the northwestern Corn Belt.” Cordonnier also left his U.S. soybean yield projection at 50.8 bu. per acre.
IKAR boosted its estimate for Russia’s wheat crop by 1.6 million metric tons (MMT), to 83.6 MMT. It expects the country to export 39 MMT of wheat in 2021. Southern areas of the country and Siberia have recently received welcome rain, improving crop prospects.
With just three days remaining in the 2020-21 marketing year, the European Union had exported 25.38 MMT of soft wheat, data from the European commission showed. That’s well under 34.64 MMT shipped last year at this time, though last year’s data did include Britain.
CORN: USDA’s weekly crop condition report yesterday showed U.S. corn rated “good” or “excellent” as of yesterday at 64%, an unexpected drop from 65% the previous week and the fourth consecutive decline. Analysts expected a rating of about 66%. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), corn showed little change, up 0.3 point to 367.0 points but 8.9 points below the five-year average for the end of June. The market awaits Wednesday’s USDA Acreage and Grain Stocks Reports.
SOYBEANS: USDA rated 60% of soybean acreage “good” or “excellent,” unchanged from the previous week and below expectations for an improvement to 61%. On our weighted CCI, the soybean crop showed little change, slipping 0.3 point to 354.3 points, 8.8 points below average.
WHEAT: Spring wheat conditions continue to worsen. USDA yesterday reported 20% of the spring wheat crop in “good” to “excellent” condition, down from 27% from a week ago and 69% a year ago. The spring wheat CCI rating fell another 7.5 points over the past week to 269.5 points, now 94.3 points below the five-year average for the end of June. The winter wheat crop was 33% harvested as of Sunday, up from 17% a week earlier but behind the five-year average of 40%.
CATTLE: Steady to weaker
HOGS: Steady-mixed
CATTLE: Cash markets started the week with a slightly softer tone, while wholesale beef prices extended a nosedive. Live steers in top U.S. cattle areas yesterday averaged $125.47, down seven cents from Friday. Choice cutout values averaged $297.43, down $7.13 for the day and the lowest since April 30. On the daily charts, live cattle futures scored a bearish “outside day” down yesterday, but market bulls still have a near-term technical advantage. Upside price objectives include closing August futures above solid resistance at the $125.775 contract high. Downside objectives include closing below solid technical support at $120.00, just under last week’s low.
HOGS: Hog futures will trade with expanded $4.50 daily price limits today after yesterday’s limit-up gains. Carcass values yesterday averaged $112.53, down $4.36 from Friday, according to USDA. Carcass cutout values averaged $115.13, up $5.09 from Friday. The recent sell-off produced severe chart damage, suggesting a major market top is in place, and market bears hold the near-term technical advantage. Downside price objectives for market bears include closing August futures below solid technical support at the June low of $96.50. Upside price objectives include closing August above solid resistance at $107.50.