Ahead of the Open | April 8, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 4 to 6 cents higher.
Wheat: SRW 1 to 3 cents higher; HRW 9 to 11 cents higher; HRS 7 to 9 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each traded on both sides of unchanged overnight, though saw increased buying towards the end of the overnight session, each going into the break nearer session highs. Front-month crude oil futures started the week off on a weaker tone, though pared losses from an early overnight low, while the U.S. dollar index traded around unchanged.
China’s grain production increase faces a bottleneck, state media reported on Monday, without providing details. “Under the current situation where it is increasingly difficult to increase production, my country has launched a new round of action to increase grain production capacity,” state-run newspaper Economic Daily wrote.
India is expected to produce 105 MMT of wheat this year, according to the country’s flour millers group, 7 MMT (6.25%) lower that the Indian government estimates. That would be down from the 112.74 MMT the Indian government estimated last year, though private forecasters said production was at least 10% lower than the official forecast. State-run Food Corporation of India (FCI) says the government has procured 1 MMT of new-crop wheat as of April 7, up from 700,000 MT at this time last year. FCI is expected to buy 31 MMT to 32 MMT of wheat from farmers in 2024-25, up from 26.2 MMT in 2023-24.
Treasury Secretary Janet Yellen in an interview with CNBC on Monday said the U.S. will not rule out tariffs on China’s green energy exports. “I wouldn’t rule anything out at this point,” Yellen said when asked about potential tariffs. Yellen, who is on a trip to China, warned Beijing that Washington will not accept new industries being decimated by Chinese imports. She also said areas where Washington has national security interests, the administration has shown it is ready to act, like export restrictions.
CORN: May corn futures favored the downside overnight, though went into the break near session highs. Resistance stands at the 40-day moving average at $4.38 1/2, $4.42, then the report driven high of $4.48. Meanwhile, support stands at $4.31 1/2 then $4.28 1/2.
SOYBEANS: May soybean futures posted modest gains overnight. Bulls are seeking to overcome stiff resistance at $11.92 3/4, the 40-day moving average, which is firmly backed by the psychological $12.00 mark. A resurgence of selling pressure finds support at $11.86 1/2, then $11.76 1/2.
WHEAT: May SRW futures traded within Friday’s range overnight. Prices are near the upper end of the recent upward sloping channel. Resistance stands at $5.72 1/4 with backing from $5.75, then $5.84 1/4. Prices were supported by the 40-day moving average overnight, which currently stands at $5.63. Further selling finds support at $5.55 3/4.
CATTLE: Lower.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open lower in a continuation of Friday’s technical selling pressure. The continued relative strength seen in dressed weights has apparently caught up to the market, driving both cash cattle and wholesale beef prices lower. Cattle futures finished last week poorly, ending virtually on their weekly lows. Long liquidation is likely to continue barring any stabilization on the cash cattle or wholesale beef markets. Last week’s cash cattle average is going to fall for the second consecutive week, it is just a matter of how much. Wholesale beef prices ended Friday mixed, with Choice cutout firming 2 cents to $297.17 and Select falling $1.35 to $294.70, widening the Choice/Select spread to a still-tight $2.47.
HOGS: Lean hog futures are expected to open higher on a continuation of Friday’s strength. Lean hog futures extended well above prior resistance in Friday’s upside technical breakout, which has been supported by robust cash fundamentals. The CME lean hog index firmed another 43 cents to $86.31 as of April 4, continuing the seasonal rise that begun at the beginning of this year. April lean hog futures now maintain a $3.015 premium to today’s cash quote, while the contract expires on Friday at noon and will be cash settled against the index next Tuesday. Wholesale pork prices pulled back modestly from Thursday’s high, as cutout fell 40 cents to $97.75, led by a $14.24 drop in bellies. Movement eased to a modest 228.16 loads.
