Ahead of the Open | April 12, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 2 cents lower to 2 cents higher.
Wheat: SRW 4 to 6 cents higher; HRW 8 to 12 cents higher; HRS 5 to 8 cents higher.
GENERAL COMMENTS: Corn and wheat futures posted corrective gains overnight, while soybeans pulled back from Tuesday’s gains. With meal firmer and outside markets turning supportive, we expect soybeans to take a stab at the upside during daytime trade, though early price action is likely to be choppy. The U.S. dollar index is around 550 points lower this morning after U.S. consumer inflation data dropped more than anticipated. Front-month crude oil futures are around 50 cents higher.
The Kremlin said not all of the United Nations’ efforts to remedy the Black Sea grain deal are working. As a result, the outlook for the deal is “not so great” as promises to remove obstacles to Russia’s grain and fertilizer exports were not being fulfilled. Meanwhile, inspections resumed on Wednesday aboard ships operating under the Black Sea grain deal after a one-day halt. On Tuesday, the UN said inspections temporarily stopped as parties needed more time to agree operational priorities.
Aggressive snowmelt is continuing in the upper U.S. Midwest and northeastern Plains where flooding is evolving. World Weather Inc. says rain and some wet snow will impact these areas Friday into Saturday morning to aggravate the flooding situation.
Dryness will continue in the southwestern Plains, further stressing and already parched HRW crop.
The U.S. consumer price index (CPI) rose 0.1% in March after increasing 0.4% in February. Over the past 12 months, the CPI increased 5.0%, which was the smallest annual rise since May 2021 and down from a 6.0% annual rise in February. Core inflation, minus food and energy prices rose 5.6% from year-ago.
CORN: May corn futures recouped Tuesday’s losses during overnight trade. The 100- and 200-day moving averages converge around $6.57 to form solid near-term resistance. Above that, bulls would be targeting last week’s spike high at $6.68 1/2. Near-term support extends from $6.49 1/2 to $6.40 1/4.
SOYBEANS: May soybean futures traded within Tuesday’s range overnight. Near-term resistance extends from $14.99 1/2 to $15.01 1/2. Above that, Tuesday’s high at $15.07 1/2 would serve as resistance. Near-term support extends from $14.93 to $14.82 1/2.
WHEAT: May HRW wheat futures gained back Tuesday’s losses overnight. Near-term resistance extends from $8.86 to $9.02. Near-term support extends from $8.64 1/4 to $8.53 1/4.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone amid bullish cash fundamentals, though we anticipate traders will remain relatively cautious buyers. April live cattle futures reached $172.475 on Tuesday, eclipsing the 2014 high on the continuation chart. It’s not often you can say traders are being conservative when a market posts an all-time high, but that’s the case in cattle futures, as the April contract remained below last week’s record cash price of $173.10. As is often the case in a strong bull market in cattle, cash is leading futures higher. Cash sources expect the cash market to strengthen further this week, so there’s still upside in futures. Wholesale beef prices continue to firm with Choice up $2.19 and Select $3.64 higher on Tuesday. Packers are raising wholesale beef prices to keep margins in the black as they compete for a tightening supply of market-ready cattle.
HOGS: Lean hog futures are expected to open with a mostly weaker tone on pressure from weak cash fundamentals and technicals. While the market should soon begin a seasonal rally, the path of least resistance is down and traders are likely to be cautious buyers until the cash market starts to strengthen. Wholesale pork prices are cheap compared to beef, with the Choice beef/pork cutout ratio pushing above 3.8 on Tuesday. With beef prices likely to continue their climb amid tightening supplies, the pork cutout value should be well supported.
