Ahead of the Open | April 13, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 6 to 12 cents higher.
Wheat: SRW 4 to 7 cents lower; HRW 9 to 12 cents lower; HRS 3 to 5 cents lower.
GENERAL COMMENTS: Soybeans and soymeal were supported overnight by additional cuts to the Argentine crop estimate. Wheat futures traded lower, while corn was caught in the middle and posted mixed trade. Outside markets are mixed this morning. While the U.S. dollar index is down more than 400 points, crude oil futures are modestly weaker.
USDA announced daily corn sales totaling 327,000 MT to China – 191,000 MT for 2022-23 and 136,000 MT for 2023-24.
The Rosario Grain Exchange made further cuts to its Argentine crop estimates amid the historic drought that slashed production potential. The exchange now estimates the country’s soybean crop at 23 MMT, down 4 MMT from its previous forecast. It cut the Argentine corn production forecast 3 MMT to 32 MMT.
Brazil raised its soybean crop estimate to a record 153.6 MMT, up 2.2 MMT from its forecast last month. The 2022-23 soybean export forecast was raised 1.3 MMT to 94.3 MMT. Conab raised Brazil’s corn crop estimate by 203,000 MT to a record 124.9 MMT – the first corn crop was raised 483,000 MT and the safrinha crop was cut 281,000 MT. The 2022-23 corn export forecast remained at 48 MMT.
Russia’s foreign ministry said, “Without progress in solving five systemic problems... there can be no talk of extending the Black Sea Initiative after May 18.” Moscow wants the Rosselkhzbank to be reinstated in the SWIFT financial communications system and progress on lifting any restrictions on Russian agricultural and fertilizer exports.
World Weather Inc. says the west-central and southwestern Plains will remain drier biased for the next 10 days. HRW wheat areas in Nebraska and Kansas may get rain in the second week of the forecast, though precip will be lightest in the dry western areas.
Rain and snow in the Red River Basin Friday and Saturday will aggravate flooding resulting from melting snow.
The Southeast will experience another wave of significant rain later today and Friday with some follow-up rain during the weekend keeping soils excessively wet. The Delta will not be quite as wet.
Export sales for the week ended April 6:
Corn: Net sales of 527,700 MT for 2022-23 dropped 58% from the previous week and 68% below the four-week average. China purchased 140,800 MT of old-crop corn during the week. Sales were near the bottom of pre-report estimates ranging from 500,000 MT to 1.3 MMT for 2022-23.
Soybeans: Net sales of 364,500 MT for 2022-23 increased sharply from 155,300 MT the previous week and rose 17% from the four-week average. Traders expected sales of 250,000 to 600,000 MT for 2022-23.
Wheat: Net sales of 135,700 MT for 2022-23, down 30% from the previous week and 27% below the four-week average. Traders expected old-crop sales to be between 75,000 and 350,000 MT.
CORN: May corn futures continued the rebound from last week’s low overnight, climbing above the 100-and 200-day moving averages. The contract has not closed above those levels since March 31 – and that was a single close above those levels. Near-term resistance is at this month’s high at $6.68 1/2. Near-term support is layered from $6.52 1/2 to $6.40 1/4, with the short-term and intermediate moving averages all within that range.
SOYBEANS: May soybean futures bounced off the 50-day moving average and pushed above yesterday’s high overnight. Near-term resistance is at this month’s high at $15.27 3/4. Near-term support is layered from $15.01 1/2 to $14.81 1/2.
WHEAT: May HRW wheat futures fell to a new low for the month overnight, dropping below the 20- and 100-day moving averages. Near-term support is layered from the 50-day moving average at $8.49 3/4 to the 40-day average near $8.42. Near-term resistance starts at $8.53 1/4.
CATTLE: Higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a firmer tone amid expectations the cash market will strengthen again this week. Packers got more active with bids on Wednesday and there were unconfirmed reports of trade in the $180 to $181 area in the Southern Plains. April live cattle futures finished Wednesday just above last week’s average cash price, so there’s plenty more upside potential. Choice boxed beef prices firmed $3.38 on Wednesday, reaching $298.48. With tightening beef supplies, wholesale prices are likely to continue to rise, especially if packers try to keep cutting margins in the black as they compete for reduced market-ready supplies. Not only are slaughter numbers declining but carcass weights are well under year-ago and the lightest since 2019, suggesting wholesale prices aren’t likely to top anytime soon.
USDA reported net beef sales of 8,700 MT for 2023, down 36% from the previous week and 43% below the four-week average. China had net sales reductions of 400 MT.
HOGS: Lean hog futures are expected to open with a mostly weaker tone. While the market is due for a correction, traders have ignored the oversold conditions and surging cattle market. The CME lean hog index is down another 27 cents to $72.25 (as of April 11), which is now just 14 cents above the January high. The pork cutout value dropped $1.44 on Wednesday to $76.02. Wholesale pork prices are the weakest since the end of 2020, despite surging beef values. The Choice beef/pork cutout ratio widened to 3.9 and it appears packers will continue to cut wholesale pork prices until retailers signal they have gotten cheap enough by making aggressive purchases.
USDA reported net pork sales of 27,100 MT for 2023, down 49% from the previous week and 31% below the four-week average. China bought 3,900 MT of U.S. pork during the week. Exports of 37,000 MT were a marketing-year high, including shipments of 13,500 MT to Mexico and 8,200 MT to China.
China imported 650,000 MT of meat in March, up 7.1% from February and 9.9% more than last year. China doesn’t break out meat imports by category in its preliminary trade data, but the increase was driven by stronger pork imports, which started to increase late last year. Through the first quarter of this year, China imported 1.95 MMT of meat, up 17.2% from the same period last year.
