Ahead of the Open | March 31, 2023
GRAIN CALLS
Corn: Steady to a penny higher.
Soybeans: 1 to 3 cents higher.
Wheat: Winter wheat 1 to 3 cents lower; spring wheat 4 to 6 cents lower.
GENERAL COMMENTS: Price action was relatively quiet in the grain and soy markets overnight as traders await USDA’s reports later this morning. Pre-report positioning should dominate trade until 11 a.m. CT. Besides the USDA report data, today is also the end the month and quarter, so price action could be volatile after the reports. Front-month crude oil futures are around 50 cents higher and the U.S. dollar index is nearly 200 points higher.
USDA did not report a daily corn sale this morning, ending a string of eight straight days and 12 of the past 13 with corn sales totaling 3.383 MMT – all to China except for 112,800 MT to unknow destinations.
Traders are preparing for USDA’s Prospective Plantings and Quarterly Grain Stocks Reports at 11 a.m. CT. 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. These reports have generated some major price moves for the corn and soybean markets, with March 1 stocks being the primary price driver for corn and plantings having a greater influence on the post-report moves in soybeans.
World Weather Inc. says two storm systems are expected in the north-central United States between now and Thursday of next week, producing 1.00 to 3.00 inches of moisture and some impressive snowfall. That will add to flood potential in the Red River valley and upper Midwest. World Weather says flooding in the upper Midwest and northeastern Plains will begin in the second and third weeks of April. The bulk of HRW wheat country will remain dry over the next 10 days, especially southwestern areas, though there is some rainfall in the second week of the outlook. World Weather believes the U.S. model is overdoing rain chances. Rain will fall abundantly in the Delta, Tennessee River Basin and portions of the lower eastern Midwest for the next 10 days, keeping fieldwork to a minimum.
The Fed’s key inflation gauge cooled more than expected in February. The personal consumption expenditure (PCE) price index in the U.S. increased 0.3% month-over-month in February 2023, easing from a 0.6% rise in January. Excluding food and energy, the PCE price index advanced 0.3%, slower than the 0.5% rise in January.
CORN: May corn futures paused overnight but bulls still hold the technical upper hand with the contract projected to the winter highs after the upside breakout earlier this week from the inverted head-and-shoulders formation. Near-term support extends from $6.48 1/4 to the 10-day moving average around $6.41 3/4. Wednesday’s high at $6.55 1/2 is near-term resistance.
SOYBEANS: May soybean futures failed to clear the 20-day moving average at $14.80 1/2 overnight. That will serve as initial resistance, followed by yesterday’s high at $14.82 1/2 and the 100-day average at $14.90 1/2. Near-term support is in the $14.76 to $14.72 range.
WHEAT: May SRW wheat futures
CATTLE: Higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a firmer tone on followthrough buying and supportive cash fundamentals. Cash cattle traded at $167 in the Southern Plains and as high as $170 in the northern market Thursday – up sharply from last week’s average of $164.41. Some feedlots reportedly passed on those prices in hopes of even stronger bids. Despite the strong gains so far this week, April futures could further extend to the upside based on Thursday’s cash trade. But we wouldn’t be surprised if some profit-taking is seen ahead of the weekend as today marks not only the end of the month but the end of the quarter.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid pressure from weakening cash fundamentals. The CME lean hog index is down another 23 cents, extending the slide to a nineth straight day. At $75.77 (as of March 29), the cash index is down $4.24 from its mid-March peak but still $3.66 off the January low. April hog futures finished Thursday 68 cents above today’s cash quote. The pork cutout value dropped $1.47 on Thursday as all cuts except ribs weakened. Movement slowed to 285.9 loads despite the price weakness. USDA’s Hogs & Pigs Report estimated the March 1 U.S. hog herd at 72.86 million head, up 171,000 head (0.2%) from year-ago. The breeding herd at 6.127 million head increased 0.5% and the market hog inventory rose 0.2%. All of those categories were in line with the average pre-report trade estimates. Market hog inventories for the three lightest categories were smaller than anticipated, while spring and summer farrowing intentions were lower than expected, but that won’t likely have much if any market impact.
