Ahead of the Open | May 20, 2024

Strong gains in wheat led corn and soybeans higher overnight. Wheat maintaining overnight gains will be key as the recent trend has been overnight strength followed by weakness after the open.

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

GRAIN CALLS

Corn: 3 to 5 cents higher.

Soybeans: 3 to 5 cents higher.

Wheat: Winter wheat 19 to 22 cents higher; HRS 15 to 17 cents higher.

GENERAL COMMENTS: Strong gains in wheat led corn and soybeans higher overnight. Wheat maintaining overnight gains will be key as the recent trend has been overnight strength followed by weakness after the open. Outside markets were unfavorable overnight, as front-month crude oil futures continue to struggle garnering any bullish momentum from recent lows and the U.S. dollar index is trading around 175 points higher.

Rains fell on the western and northern Corn Belt overnight and will continue this morning. Forecasts call for generally wet conditions over the region during the next 10 days. HRW wheat areas of Southern Plains will be mostly dry this week. In the Black Sea region, southern Russia and eastern Ukraine are also expected to trend drier than normal. In Brazil, safrinha corn areas will receive some needed rains, while southern locations will get more rains and remain excessively wet.

Recent severe frosts across Ukraine’s northern and eastern regions could reduce this year’s grain and oilseed harvest, analyst APK-Inform said. The cold temps damaged crops of wheat, barley, rapeseed and peas, APK-Inform said, adding that 20% to 30% of the yield could be lost. Ukraine’s agriculture ministry told Reuters its crop forecast was unchanged for now, with combined grain and oilseed production at 74 MMT, down from 82 MMT last year.

Of the 8.57 MMT of soybeans China imported last month, 5.92 MMT (69.1%) came from Brazil, up 11.7% from last year. Chinese soybean imports from the U.S. totaled 2.45 MMT (28.6%) in April, up 44% from last year. For the first four months of this year, China imported 15.9 MMT of soybeans from Brazil, up 72% compared to the same period last year, while imports from the U.S. stood at 9.58 MMT, down 48%.

Argentine farmers had by early May sold only 31% of an expected 49.7 MMT crop, the slowest pace since at least 2014-15, government data show. Rains have slowed Argentina’s soybean harvest and low prices discouraged farmers from selling new-crop supplies.

CORN: July corn futures saw corrective buying overnight. Bulls are seeking to overcome resistance at $4.57 1/2, with further buying finding resistance at $4.61 3/4. Support comes in at Friday’s low of $4.51, which is reinforced by support at $4.46 3/4.

SOYBEANS: July soybean futures saw followthrough strength overnight. Bulls are seeking to overcome initial resistance at $12.40 before tackling firmer resistance at $12.48 3/4. Support stands at $12.22, the 100-day moving average, which capped most gains last week. Further weakness would find support at $12.08 1/2.

WHEAT: July SRW futures led strength overnight. Prices consolidated most of last week though are maintaining an uptrend dating back to the April low. Initial resistance stems from the psychological $6.75 mark and is reinforced by last Monday’s for-the-move high close at $6.87. Support stands at $6.63 1/2 then coinciding uptrend line support and the 10-day moving average at $6.55.

LIVESTOCK CALLS

CATTLE: Higher.

HOGS: Higher.

CATTLE: Live cattle futures and feeders are expected to open higher on continued technical strength. Prices are now trending steadily higher, as June futures were supported by last week’s surge in wholesale beef prices. Choice cutout was up $3.30 Friday to $313.45 and Select gained 89 cents to $297.40. Traders will closely watch movement this week to see if retailer demand is diminished following the surge in prices. The cash cattle average is poised to rise for the fourth consecutive week, though movement was light into Thursday last week.

HOGS: Lean hog futures are expected to open higher on technical buying. June futures have faced limited selling pressure below the $97.00 mark over the past two weeks. Continued strength in the cash market, noted by the CME lean hog index rising another 16 cents to $92.29 as of May 16, and relative strength in wholesale pork prices are likely to continue to limit the downside in futures. Pork cutout rose 58 cents to $100.85 on Friday, led higher by strength in bellies. Movement totaled 305.04 loads. Continued buying interest in pork will be key to underpinning both the cash index and futures in the next couple of weeks.