Ahead of the Open | April 11, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 5 to 10 cents higher.
Wheat: 2 to 5 cents lower.
GENERAL COMMENTS: Soybeans traded higher overnight, while wheat was lower and corn held near unchanged. Pre-report positioning will be seen this morning ahead of USDA’s April Supply & Demand Report at 11 a.m. CT. Outside markets are quiet, with crude oil futures and the U.S. dollar index both holding near unchanged.
Traders expect USDA to lower its ending stocks forecasts for corn and soybeans after March 1 stocks came in lower than anticipated, while wheat carryover is expected to increase slightly from last month. Traders expect ending stocks of 1.319 billion bu. for corn (down from 1.342 billion bu. in March), 198 million bu. for soybeans (down from 210 million bu.) and 574 million bu. for wheat (up from 568 million bu.). Traders expect USDA to make further cuts to its Argentine soybean and corn crop estimates, while the Brazilian production forecasts are anticipated to edge higher.
USDA’s “good” to “excellent” rating for winter wheat dropped one point to 27%. The portion of crop rated “poor” to “very poor” increased one point to 37%. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped 5.8 points to 251.2, led by a four-point drop in top producer Kansas. The SRW crop improved 5.1 points to 368.9. The HRW CCI rating remains historically low, while the SRW crop is rated stronger than average for early spring.
World Weather Inc. says dryness will persist in southwestern areas of the Plains for the next 10 days to two weeks. Aggressive snowmelt will be seen across the Northern Plains and upper Midwest. Rain and some wet snow will impact these areas Thursday into Saturday morning to aggravate the flooding situation.
Crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop estimate 2 MMT to 153 MMT, noting better-than-expected yields and increased acres in other areas of the country will more than compensate for losses in Rio Grande do Sul due to drought. Cordonnier raised his Brazilian corn production estimate 2 MMT to 123 MMT, citing beneficial weather to date for the safrinha corn. Cordonnier kept his Argentine crop estimates at 26 MMT for soybeans and 36 MMT for corn, as the weather “has turned the corner.”
CORN: May corn futures traded between the 100- and 200-day moving averages just above $6.57 and the 10-day average near $6.52 overnight. Those levels will serve as near-term resistance and support, respectively. Additional resistance is in the $6.60 to $6.68 1/2 range. Additional support is in the $6.49 1/2 to $6.40 1/4 range.
SOYBEANS: May soybean futures posted corrective gains overnight but the upside was capped by the 50-day moving average around $15.02. That will be near-term resistance, with additional resistance at $15.10 1/4. Near-term support extends from $14.86 1/4 to $14.77 3/4.
WHEAT: May HRW wheat futures were turned back by the 200-day moving average around $8.87 during overnight trade. That will serve as initial resistance, followed by last week’s high at $9.02. Near-term support extends from $8.71 1/2 to $8.53 1/4.
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone. Cash fundamentals support strong gains, but we expect buyers to remain cautious. Cash cattle averaged $173.10 last week, eclipsing the previous all-time high from 2014. Traders expect packers to pay higher prices for cash cattle again this week, as they have been able to keep margins in the black despite the surge in cash prices due to rising wholesale beef values. Traders remain cautious toward futures, with the lead April contract finishing Monday $1.725 below last week’s average cash price, though it appears just a matter of time before live cattle futures top their all-time high of $171.975 from 2014. Boxed beef prices jumped $1.93 for Choice and $2.62 for Select, though movement totaled only 69 loads on Monday.
HOGS: Lean hog futures are expected to open with a mixed tone. April lean hog futures will likely face pressure from the falling cash index, but deferred contracts could see followthrough corrective buying after Monday’s gains. The CME lean hog index is down another 24 cents to $72.64 (as of April 7), extending the price slide to a 16th straight day. The cash index is just 53 cents above the January low and appears headed below that level, though April lean hog futures finished Monday 73.5 cents above today’s cash quote, suggesting traders sense a low will be posted soon. The pork cutout value fell 84 cents on Monday as the wholesale market was unable to maintain the morning price strength.
