Ahead of the Open | April 24, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 1 cent lower to 1 cent higher.
Wheat: SRW steady to 2 cents lower; HRW steady to 2 cents higher; HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each traded in tight ranges overnight considering the recent volatility. May futures’ options expiration is on Friday, which could lead to some suppression to volatility as the week draws to a close. Outside markets are quiet as well, as front-month crude oil futures are trading modestly lower and the U.S. dollar index is around 200 points higher, though still well below yesterday’s high. The bond market is trading near five-month lows, which will be closely watched to see if interest rates continue their recent uptrend.
India is struggling to replenish government wheat stocks, with purchases down sharply from year-ago levels. State-run agencies have bought 11.92 MMT of wheat from farmers so far this season, down 25% from the 15.92 MMT purchased at this time last year, according to data from the Food Corporation of India (FCI). Untimely rainfall in northern states, particularly in Punjab, has delayed purchases, a government official told Reuters. Higher open market prices, which encourage farmers to sell to private traders, are also slowing government purchases. There is growing speculation India may not reach its procurement target of 30 MMT to 32 MMT, potentially leading to wheat imports for the first time since 2017.
The Senate passed a $95.3 billion aid package for Ukraine, Israel and Taiwan, sending it to President Joe Biden’s desk. The $95.3 billion supplemental includes: $60.8 billion in Ukraine-related funds; $26.4 billion in assistance for Israel and Gaza; $8.1 billion for various Indo-Pacific security needs, including $3.3 billion for the submarine industrial base, $2 billion for support to Taiwan and $1.9 billion to replenish stocks given to Taiwan; and several policy provisions that were not originally in the Senate’s supplemental, including language that would ban TikTok in the U.S. unless its Chinese owners divest from the social media app, the transfer of $5 billion in repossessed Russian assets to Ukraine and increased sanctions on Russia and Iran.
Secretary of State Antony Blinken arrived in Shanghai on Wednesday with U.S./China ties on a steadier footing, but with a long list of issues to address. Blinken will meet with business leaders before heading to Beijing for talks on Friday with his counterpart, Foreign Minister Wang Yi, and a likely meeting with President Xi Jinping. While recent meetings between officials from both countries have eased tensions, Washington and Beijing have made little headway on curbing China’s supply of chemicals used to make fentanyl, the Taiwan situation and China’s backing of Russia in its war in Ukraine.
Recent forecasts call for flooding this weekend and into next week from Oklahoma and a part of the Delta through Missouri and Illinois to the western Great Lakes region, says World Weather Inc. Planting delays are expected to occur, though delays are not expected to be lasting.
CORN: May corn futures traded in a narrow range near unchanged overnight. Bulls next target is the report driven March 28 high of $4.48, which is quickly reinforced by the $4.50 mark, then the 100-day moving average at $4.52 1/2. Support comes in at $4.42 with significant backing from the 40-day moving average at $4.36 3/4.
SOYBEANS: May soybean futures traded near unchanged most of the night. Resistance stands at $11.74 with backing from the 40-day moving average, currently at $11.77 1/4. Additional buying finds resistance at $11.87 3/4. Meanwhile, selling pressure finds support at $11.66 1/2, with firmer backing from the 10-day moving average at $11.61, then $11.59 1/4.
WHEAT: May SRW futures saw modest profit taking overnight. Bulls are seeking to overcome uptrend line resistance, currently at $5.87 1/4, that capped nearly all gains since early March. Further buying finds resistance at the psychological $6.00 mark. Initial support stands at $5.81 3/4 with backing from $5.74 3/4, then $5.67 1/4.
CATTLE: Choppy/higher.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, in a continuation of yesterday afternoon’s strength, though lack of guidance from the cash market could limit buying. Prices remain between significant technical resistance at the 40-day moving average and support from last week’s highs. It will likely take a significant catalyst to push prices outside of that range, which could come from this afternoon’s Cold Storage Report. The five-year average is a 12.4-million-lb. decline in beef stocks. Choice beef prices firmed $1.47 to $297.40 Tuesday and Select rose 89 cents to $292.76, while movement improved to a solid 147 loads. Beef demand is entering its most critical timeframe of the year as packers and retailers gear up for the big “beef” holidays through the Fourth of July. Slaughter levels and wholesale beef prices will be a good gauge of beef demand.
HOGS: Lean hog futures are expected to continue to work higher, extending gains from early this week. After a brief pause the last couple of days, the CME lean hog index is up 14 cents to $91.45 as of April 22, ending a modest 15-cent slide. Traders will look to this afternoon’s Cold Storage Report as a gauge of demand through Easter. March historically shows a 10.3-million-lb. drop in pork stocks during the month. Wholesale pork prices plunged $4.84 to $96.86 on Tuesday, falling back below the $100.00 mark. Bellies led the way lower, sinking $23.70. It would be surprising to see bellies maintain that decline, as big price swings are generally leveled out in the following couple of days. Still, pork cutout as a whole continues to flounder above the $100.00 mark, which hints at a possible short-term top.
