Ahead of the Open | April 11, 2024
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 3 to 5 cents lower.
Wheat: SRW 2 to 4 cents lower; HRW 4 to 6 cents lower; HRS 4 to 6 cents lower.
GENERAL COMMENTS: Corn showed relative strength overnight while soybeans and wheat favored the downside. Outside markets favored a “risk-on” tone this morning as producer price inflation (PPI) came in lower than expected, rising 0.2% month-over-month in March 2024, below a 0.6% rise in February and below expectations of 0.3%. Front-month crude oil futures continue to consolidate from the recent push higher, while the U.S. dollar index is trading around 50 points lower on lower interest rates this morning.
USDA is expected to make relatively modest changes to its domestic usage forecasts in the Supply & Demand Report at 11:00 a.m. CT. On average, analysts expect ending stocks to decline 70 million bu. for corn to 2.102 billion bu., rise 2 million bu. for soybeans to 317 million bu. and increase 17 million bu. for wheat to 690 million bushels. Globally, focus will remain on South American production, though USDA will likely remain above many private crop forecasts and Conab with its Brazilian crop estimates.
Conab cut their crop estimates for both corn and soybeans this morning. The agency lowered Brazil’s total corn crop to 110.964 MMT, 1.8 MMT below their 112.753 MMT estimate in March, a 20.929 MMT drop year-over-year. The agency lowered their 2023-24 corn export forecast 1 MMT to 31 MMT. Conab lowered their soy production estimate 336,000 MT to 146.522 MMT. The 2023-24 soybean export forecast was unchanged at 92.3 MMT.
The Rosario Grain Exchange slashed its Argentine corn crop forecast by 6.5 MMT to 50.5 MMT, citing “unprecedented” damage from spiroplasma disease carried by leafhoppers. The exchanged noted, “This is the first time since estimates have been made that such significant damage has been seen from a non-climatic factor.”
Export sales for the week ended April 4:
Corn: Net sales of 325,500 MT for 2023-24, a marketing year low – down 66% from the previous week and 72% from the four-week average. Net sales of 9,500 MT for 2024-25. Sales came below expectations of 750,000 MT to 1.3 MMT for 2023-24. Expectations ranged from 0 to 200,000 MT for 2024-25.
Soybeans: Net sales of 305,300 MT for 2023-24, up 57% from the previous week but down 3% from the four-week average. Mexico purchased 172,600 MT of soybeans during the week. Traders expected 200,000 to 600,000 MT for 2023-24.
Wheat: Net sales of 80,700 MT for 2023-24, up noticeably from the previous week but down 2% from the four-week average. The Philippines led purchases for old-crop. Net sales of 274,400 MT for 2024-25. Traders expected (100,000) to 250,000 MT for 2023-24 and 100,000 to 300,000 MT for 2024-25. Exports of 626,800 MT were a marketing year high.
CORN: May corn futures showed relative strength overnight. The 40-day moving average at $4.38 limited gains overnight. Further resistance stands at $4.42, then the March 28 high of $4.48. Support comes in at $4.34 1/4 with backing from $4.31 1/4.
SOYBEANS: May soybean futures continued lower overnight, marking a fresh five-week low. Initial resistance stands at $11.64 1/2, with backing from $11.74. Bulls are seeking to hold support at $11.58 1/4, $11.55, then the psychological $11.50.
WHEAT: May SRW futures gave up Wednesday’s gains overnight. Bulls are seeking to reclaim support at the 40-day moving average, which currently stands at $5.62 1/4. Further buying finds resistance at $5.67 1/4, then $5.75. Support comes in at $5.56, with backing from uptrend line support at $5.52 3/4. Further selling finds support at $5.45 1/4.
CATTLE: Lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a weaker tone following Wednesday’s reversal lower. The technical posture remains bearish and points to continued selling pressure, while the lack of fresh bullish fundamental news is unlikely to spur buyer interest. Cash cattle trade has had a slow start to the week, as packers continue to manage margins deep in the red, limiting slaughter runs and their demand for supplies. Cutout values continue to slip, as both Choice and Select fell back below the psychological $300.00 mark. Choice fell $3.86 to $298.23 and Select dropped $3.88 to $296.02, though movement was a moderate 129 loads. USDA reported net beef sales of 13,600 MT for 2024, down 27% from the previous week but up 2% from the four-week average.
HOGS: Lean hog futures are expected to open with a mostly weaker tone in a continuation of Wednesday’s key technical reversal. Still, cash fundamentals continue to support higher hog prices, which could limit selling pressure after the open. The CME lean hog index is up another 90 cents to $88.78 as of April 8. The wholesale market has fallen modestly behind, as cutout fell 46 cents to $100.25 on Wednesday, driven by weakness in bellies. Movement remained a relatively modest 253.23 loads. The strength seen in the index paired with moderately weaker wholesale values has weakened packer margins, with some packers now cutting in the red, which could limit their willingness to keep paying up for cash hogs. USDA reported net pork sales of 47,400 MT for 2024, up 65% from the previous week and 33% from the four-week average.
