Ahead of the Open | March 22, 2024
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 8 to 10 cents lower.
Wheat: Winter wheat steady to 2 cents lower; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each favored the downside overnight, though pared losses into the break. Outside markets were relatively quiet overnight, as front-month crude oil futures saw modest buying and the U.S. dollar continued to extend to the upside, trading to the highest mark in over a month. The U.S. dollar continues to post gains despite a dip in interest rates, a testament to it’s recent strength.
The European Commission proposed on Friday imposing tariffs of 95 euros ($102.76) per metric ton for grains and 50% for oilseeds on imports from Russia and Belarus in an attempt to prevent Moscow and its ally from distorting EU markets and placate farmers who have protested for months over cheap imports. The commission said the tariffs were also designed to limit Russia’s ability to fund its war in Ukraine and to curb its sales of grain stolen from Ukraine. The commission said that, with tariffs, transit of grain through the bloc to other countries would still be allowed as would financing, insurance, storage and transport of such shipments. The Kremlin emphasized the necessity for experts to assess whether Russia or the EU would suffer negative consequences from the proposed restrictions.
On March 17, a tow with 12 barges moved through Lock and Dam 2 in Hastings, Minnesota, opening the Upper Mississippi River to shipping after its cyclic winter shutdown. This year, the unusually warm weather prompted the U.S. Army Corps of Engineers to cancel the annual Lake Pepin survey in February. Despite the warm weather, the locks remained closed for winter maintenance, which was completed March 15.
USDA’s Cattle on Feed Report this afternoon is expected to show the March 1 feedlot inventory up 0.9% from year-ago at 11.755 million head. That would be the sixth straight month of year-over-year increases in feedlot numbers. After a sharp drop in the number of calves moved into feedlots in January, placements last month are expected to have jumped 6.4% from last year. Marketings are expected to be up 3.8%. The extra day for leap year likely helped inflate both placements and marketings.
USDA reported daily sales of 263,000 MT of corn for delivery to Mexico. Of the total, 173,000 MT is set to be delivered during the 2023-24 marketing year and the remaining 90,000 MT is for delivery during the 2024-25 marketing year.
CORN: May corn futures saw modest selling pressure overnight. Bulls continue to face stiff resistance at the 40-day moving average, currently at $4.41 3/4. That is backed by yesterday’s high of $4.45 3/4. Support comes in at $4.37 1/4, which is quickly backed by the 20-day moving average at $4.36 3/4. Further selling finds support at $4.33 3/4.
SOYBEANS: May soybean futures saw profit taking overnight. Bulls are seeking to overcome resistance at $12.12, $12.17 1/2, then yesterday’s high of $12.26 3/4. Support at the 40-day moving average, currently at $11.96 1/4, limited losses overnight. Further selling eyes support at $11.86 3/4, then $11.81.
WHEAT: May SRW futures posted modest losses overnight. Gains continue to be capped by 20-day moving average resistance, which currently stands at $5.52. Further resistance comes in at $5.59, then $5.67. Initial support stands at $5.41 1/2, with backing from $5.37, then $5.28 1/2.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, driven by strengthening cash fundamentals, though technical resistance could continue to limit gains. The $188.75 level in April futures continues to serve as stiff resistance, capping most of the upside in the last month. Cash cattle trade was active in the $188.00 to $190.00 range in the Plains on Thursday, with the highest prices in the northern market. It appears this week’s cash cattle average will top the all-time high of $188.75 posted in June 2023. Still, April futures struggled to follow through to the upside on Thursday. Wholesale beef prices continue to show relative strength as well as packers manage tight supplies. Choice cutout was up another 29 cents to $313.73 while Select was up $1.02 to $303.73.
HOGS: Lean hog futures are expected to open with a mostly weaker tone, continuing the recent trend lower. April futures have closed lower for four consecutive sessions despite persistent strength in the CME lean hog index. The index, which is up another 33 cents to $83.54, is likely to limit the downside as the premium April futures hold to it has slipped to $1.36, below the average gain the index historically sees from now until the April contracts expiration in mid-April. Wholesale pork prices have started to roll over, which likely plays a significant role in the weakness in futures. Cutout is down 10 cents to $92.08, led by weakness in ribs and bellies. More notable is the dip in movement, which fell to just 196.95 loads on Thursday. A buildup of supplies is likely to lead to more near-term weakness in the wholesale market.
