Ahead of the Open | June 3, 2024

Strong gains in wheat led to modest gains in corn overnight, while soybeans continue to see relative weakness. Each saw an increase in buying activity into the break.

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: 6 to 8 cents lower.

Wheat: Winter wheat 19 to 22 cents higher; HRS 16 to 18 cents higher.

GENERAL COMMENTS: Strong gains in wheat led to modest gains in corn overnight, while soybeans continue to see relative weakness. Each saw an increase in buying activity into the break. Outside markets are relatively quiet this morning. Front-month crude oil futures are facing modest selling pressure despite news of OPEC+ extending production cuts, while the U.S. dollar index is trading around 75 points lower.

USDA reported daily sales of 110,000 MT of corn for delivery to Spain during the 2023-24 marketing year.

Brazil’s safrinha corn harvest reached 4.7% done as of last Thursday, according to AgRural, ahead of 1.4% at that time last year. AgRural says harvest results thus far have been a “positive surprise” in Mato Grosso, while yield losses in Parana were caused by heat and irregular rainfall.

Frequent rain events are expected across the Corn Belt this week, with some localized flooding possible. Less rainfall is forecast for next week. The Delta will also receive periodic rains this week. Dryness is still a concern for wheat in southern Russia and immediate neighboring areas. Rain in Australia is expected to be supportive of planting – at least in the most important production areas. Rainfall in Brazil and Argentina will be limited over the next 10 days, which will be welcome in southern Brazil.

USDA is expected to report April soybean crush totaled 175.3 million bu., based on a Bloomberg survey. That would be down 28.4 million bu. (13.9%) from the March all-time record and 11.7 million bu. (6.3%) below April 2023. Corn-for-ethanol use is expected to total 433.0 million bu., which would be down 35.8 million bu. (7.6%) from March but up 18.9 million bu. (4.6%) from year-ago.

Australia’s 2024-25 wheat production should be bigger than last year’s after an increase in planted area, according to Rabobank. The country should harvest 27.4 MMT of wheat from this year’s crop, up 5.7% from 2023-24, as planted area is set to rise by 961,000 hectares to 13.48 million hectares (33.3 million acres). However, Rabobank expects smaller crops for barley and canola. It forecasts production of 10 MMT for barley, down 7.2% from last year, and 5 MMT for canola, down 11.4%. Wheat and canola production would be roughly in line with the five-year average, but barley would be around 2 MMT below average.

CORN: July corn futures posted modest corrective gains overnight. Bulls are seeking to overcome resistance at $4.49, which acted as a strong pivot in April. Further buying eyes resistance at $4.55 1/4. Meanwhile, support comes in at the overnight low of $4.42 3/4, which is backed by firm support at $4.40.

SOYBEANS: July soybean futures continued lower overnight, though went into the break well off session lows. Bulls are seeking to overcome initial resistance at $12.02 before tackling the 40-day moving average, currently at $12.11 1/4. Further buying finds resistance at the 10-day moving average at $12.17 3/4, which capped buying efforts Friday. Support lies at the overnight low of $11.91, then $11.82, which acted as firm resistance in late April.

WHEAT: July SRW futures surged higher overnight. Bulls overcame initial resistance at the 10-day moving average at $6.85 1/2, marking that as initial support, which is reinforced by Friday’s low at $6.73 3/4. Gains stopped just shy of trendline resistance at $6.96 1/2, which capped losses from the mid-April low and failed as support late last week, turning into resistance. Further buying eyes psychological $7.00 resistance.

LIVESTOCK CALLS

CATTLE: Choppy/higher.

HOGS: Higher.

CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone on corrective buying. June futures have closed lower for three consecutive sessions, with selling pressure mitigating near trendline support Friday. That level could support prices again today, as will steep discounts to the cash market. Last week’s cash average is expected to fall week-over-week, as traders expected, with trade through Friday morning down $2.67 from the record two weeks ago to $187.42. Fresh contract supplies and cutting margins back in the red are likely to weigh on cash trade again this week. Wholesale beef prices ended Friday weaker, with Choice cutout falling 84 cents to $313.20 and Select slipping 81 cents to $301.71.

HOGS: Lean hog futures are expected to open with a firmer tone on resurgent cash market strength. The CME lean hog index is up 49 cents to $91.49 as of May 30, the second straight day of gains following a seven-day drop. Traders narrowed the premium in June futures to just $2.86 above today’s cash quote, which will likely be widened if cash market strength continues ahead of the contract’s expiration on June 14. Wholesale pork prices were $1.30 higher Friday to $103.25, which is the third highest quote this spring. Gains were led by a $6.07 jump in hams, offsetting losses in bellies and loins.