Ahead of the Open | April 25, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 5 to 8 cents lower.
Wheat: Winter wheat 2 to 4 cents higher; HRS 4 to 6 cents higher.
GENERAL COMMENTS: Wheat led strength overnight, with corn following modestly to the upside. Soybeans favored the downside and went into the break near session lows. U.S. GDP expanded at an annualized rate of 1.6% in the first quarter, below 3.4% in the previous quarter and below forecasts of 2.5%. That weighed heavily on risk assets this morning. Front-month crude oil futures are trading near unchanged alongside the U.S. dollar index, both of which consolidating from recent moves.
Argentine corn farmers are bracing for a warmer-than-normal Southern Hemisphere winter that will likely undermine efforts to reduce the population of leafhopper insects that damage the crop, the Rosario Grain Exchange said. Farmers were hoping cooler weather could check the growth of leafhoppers, as they do not tolerate temperatures below about 39 degrees Fahrenheit (4 degrees Celsius). But the exchange forecasts that upcoming winter weather conditions are unlikely to help control the pest with “minimum temperatures at average values or even slightly higher.”
Thailand exported 3.06 MMT of rice from Jan. 1 to April 24, according to the commerce ministry, up 23.4% from last year and a record for the period. The value of exports surged 54%. Thailand says exports this year could exceed its target of 7.5 MMT.
Secretary of State Antony Blinken called on China to provide a level playing field for American businesses as he began a visit with Chinese leaders. Blinken stressed U.S. firms need a level playing field in China and brought up “non-market economic practices” in the country during the meeting, according to a State Department spokesperson. Beijing pushed back against the criticisms, saying its practices are in line with international rules. It urged Washington to cooperate in developing steady U.S./China business ties. Blinken is set to hold talks with American business leaders in Shanghai before heading to Beijing for meetings on Friday, including a possible face-to-face with President Xi Jinping. Blinken will try to convince Chinese officials to halt defense trade with Russia, with the threat of U.S. sanctions on Beijing for its support of Moscow.
Export sales for the week ended April 18:
Corn: Net sales of 1.300 MMT for 2023-24, over double the previous week and up 74% from the four-week average. Increases came primarily for Mexico and South Korea. Sales came in above expectations of 400,000 to 900,000 MT.
Soybeans: Net sales of 210,900 MT for 2023-24, down 57% from the previous week and 29% from the four-week average. Increases came primarily for Mexico, while China cancelled some purchases switched over from unknown destinations. Sales came in below expectations from 300,000 to 600,000 MT for 2023-24.
Wheat: Net sales of 82,000 MT for 2023-24, up noticeably from the previous week but down 4% from the four-week average. Increases came primarily for China, with the bulk of that switching from unknown destinations. Net sales of 371,900 MT for 2024-25. Traders expected (100,000) to 100,000 MT for 2023-24 and 100,000 to 400,000 MT for 2024-25.
Flooding is expected this weekend and into next week from Oklahoma and a part of the Delta through Missouri and Illinois to the western Great Lakes region following upcoming rains, says World Weather Inc. Recent heavy rains in southern Brazil are expected to cause some flooding in southern Brazil, which could damage some unharvested soybeans in Rio Grande do Sul.
CORN: May corn futures posted modest gains overnight, following wheat higher. Initial resistance stands at $4.42, which is backed by resistance at $4.43 3/4, then $4.48. Support comes in at $4.36 1/2, the 40-day moving average, which capped losses overnight. Further selling finds support at $4.35, then $4.31.
SOYBEANS: May soybean futures saw modest profit-taking overnight. Initial resistance stands at the 20-day moving average, currently at $11.66, which is backed by the 40-day moving average at $11.76 1/4, which capped gains Wednesday. Support comes in at $11.59 1/4 then $11.53 1/2, with stiff support at $11.45.
WHEAT: May SRW futures continue to lead strength. Initial resistance stands at the psychological $6.00 mark, which is backed by $6.08 then the 100-day moving average at $6.19 1/4. Bulls are seeking to hold support at $5.89 1/2 then $5.82 1/4 on a bout of corrective selling. Prices have quickly become overbought on the daily chart.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone on followthrough selling as concerns over H5N1 ramp up. All of Monday’s rally has now been negated as cash fundamentals failed to support futures’ gains. Modest cash trade has taken place this week at steady prices in Kansas. Stronger cash trade would likely limit selling after the open, as will a friendly Cold Storage Report, which showed frozen beef stocks declined more than average during March, signaling demand remains strong. Total beef stocks at 432.2 million lbs. declined 15.1 million lbs. from February, which was more than the five-year average drop of 12.4 million lbs. for the month. Frozen beef inventories fell 45.6 million lbs. (9.5%) from last year and were 58.0 million lbs. (11.8%) under the five-year average. Wholesale beef prices continued recent weakness Wednesday, as Choice cutout fell $1.66 to $295.74 and Select dropped $2.34 to $290.42, though movement totaled an impressive 148 loads. USDA reported net beef sales of 15,200 MT for 2024, down 14% from the previous week and 3% from the four-week average.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though waning demand as noted in Wednesday’s Cold Storage Report could limit gains after the open. The report from USDA signaled pork inventories built contra-seasonally last month. Pork stocks rose 6.5 million lbs. to 464.2 million lbs., whereas the five-year average was a 10.3-million-lb. decline during March. But pork inventories dropped 69.7 million lbs. (13.1%) from year-ago and 75.0 million lbs. (13.9%) from the five-year average. The CME lean hog index is up another 19 cents to $91.64 as of April 23, which marks a fresh for-the-move high. May lean hog futures ended Wednesday $5.71 above today’s cash quote, which is close to the five-year average advance from now until May 16 when the contract is cash settled. Traders have bigger-than-normal premiums built into June and August lean hog futures, signaling they expect the rally to a summer high in the cash market to outperform the five-year average performance. USDA reported net pork sales of 28,800 MT for 2024, up 32% from the previous week but down 25% from the four-week average.
