Ahead of the Open | March 30, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 1 to 4 cents higher.
Wheat: SRW and HRS 2 to 4 cents higher; HRW 5 to 8 cents higher.
GENERAL COMMENTS: HRW wheat futures led gains in the grain and soy markets overnight, as traders are more focused on weather in the Plains as the HRW crop greens up and ahead of next Monday’s first national crop condition ratings from USDA. Weekly export sales for corn, soybeans and wheat were as expected, though corn could get an added boost from another daily corn sale to China. Plus, outside markets are supportive, with front-month crude oil futures up around 75 cents and the U.S. dollar index more than 400 points lower.
USDA announced another daily old-crop corn sale, this time 178,000 MT to China. This marked the eighth straight day with an old-crop corn sale and 12 of the last 13 days. During that span, there have been 3.383 MMT of daily corn sales – all to China aside from 112,800 MT to unknown destinations.
World Weather Inc. says the southwestern Plains will remain dry over the next 10 days. Significant precipitation in the form of heavy rains and snow is expected to come in two waves across northern HRW areas of the Plains. While those storms will provide beneficial precip for the HRW crop, they will also increase flood risks in the Northern Plains and Upper Midwest.
Traders are preparing for USDA’s Prospective Plantings and Quarterly Grain Stocks Reports on Friday. Based on a Reuters survey, traders expect planting intentions of 90.880 million acres for corn, 88.242 million acres for soybeans, 47.771 million acres for all wheat, 11.801 million acres for other spring wheat and 11.212 million acres for cotton. March 1 stocks are expected to be 7.470 billion bu. for corn, 1.742 billion bu. for soybeans and 934 million bu. for wheat.
U.S. GDP grew 2.6% in the fourth quarter of 2022, based on the final revision. That was down from a previous estimate of 2.7% and the 3.2% growth recorded in the third quarter of last year. Imports, which are a subtraction in the calculation of GDP, were revised down.
Export sales for the week ended March 23:
Corn: Net sales of 1.036 MMT for 2022-23 fell 67% from the previous week and 34% from the four-week average but were near the middle of pre-report expectations ranging from 600,000 MT to 1.8 MMT. China was the lead buyer at 709,200 MT.
Soybeans: Net sales of 348,200 MT for 2022-23 more than doubled from the previous week and rose 36% from the four-week average. China was the lead buyer at 153,000 MT. Traders expected soybean sales of 100,000 to 600,000 MT for 2022-23. China was also the lead destination on soybean shipments at 543,200 MT.
Wheat: Net sales of 151,700 MT for 2022-23 rose 21% from the previous week, but were down 40% from the four-week average. Traders expected sales of 125,000 to 300,000 MT for 2022-23.
CORN: May corn futures held within Wednesday’s range during overnight trade. The 50-day moving average at $6.55 is initial resistance, followed closely by yesterday’s high at $6.55 1/2 and the 100-day average near $6.58 1/2. Near-term support starts at the 5-day moving average at $6.48 1/2.
SOYBEANS: May soybean futures extended this week’s strong corrective rebound overnight by pushing above yesterday’s high. Initial resistance is the 20-day moving average near $14.83 and then the 100-day average at $14.90 1/2. Near-term support is layered from $14.77 3/4 to $14.72.
WHEAT: May SRW wheat futures firmed overnight after a failed breakout above $7.12 1/2 yesterday. Strong near-term resistance is in the $7.24 to $7.25 range. Near-term support is around the psychological $7.00 level.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone on followthrough from a high-range close on Wednesday. But we can’t rule out a corrective pullback as traders wait on active cash cattle trade to develop. After starting the week at a discount to last week’s average cash price, April live cattle futures finished yesterday at a $1.415 premium to that level. While that’s not a huge premium, it reflects building attitudes. Cash sources now signal it’s just a matter of how much packers raise cash cattle bids for the week – and when active trade gets started. Wholesale beef prices weakened on Wednesday, with Choice down 34 cents and Select $1.46 lower. Movement totaled 114 loads. USDA reported net beef sales of 11,300 MT for 2023, down 40% from the previous week and 10% below the four-week average.
HOGS: Lean hog futures are expected to open with a mostly lower tone amid weakening technicals and cash fundamentals. The CME lean hog index is down another 25 cents, marking the eighth consecutive daily decline. The weakening cash market is pressuring futures. April lean hog futures finished Wednesday 77.5 cents above today’s cash quote (as of March 28). Until the cash market finds its secondary low and starts a seasonal climb, buyer interest will remain limited in futures. The pork cutout value firmed 26 cents on Thursday, though most of that was tied to a nearly $8 rise in bellies as four of the six cuts declined. Movement totaled 315.9 loads on the day. USDA reported net pork sales of 30,400 MT for 2023, down 20% from the previous week and 4% below the four-week average.
This afternoon’s Hogs & Pigs Report is expected to show the hog herd was fractionally bigger than last year as of March 1. All hogs and pigs are expected to be up 0.2%, with the market hog inventory 0.2% bigger and the breeding herd 0.5% larger than last year. The winter pig crop is also expected to be 1.2% larger than last year, while producers are likely to indicate they intend to marginally increase spring and summer farrowings.
