Ahead of the Open | April 14, 2023
GRAIN CALLS
Corn: 1 cent lower to 3 cents higher on bull spreading.
Soybeans: 3 to 6 cents lower.
Wheat: 1 to 3 cents lower.
GENERAL COMMENTS: Soybeans traded lower, while wheat was mostly weaker and corn was mixed in a lightly traded overnight session. We anticipate similar price action ahead of the weekend. The U.S. dollar index is more than 250 points higher this morning, while crude oil is trading just above unchanged.
USDA reported daily corn sales totaling 382,000 MT to China – 246,000 MT for 2022-23 and 136,000 MT for 2023-24. This follows daily corn sales to China on Thursday totaling 327,000 MT – 191,000 MT for 2022-23 and 136,000 MT for 2023-24.
Conditions are expected to be favorable for spring fieldwork across much of the central U.S. next week. The exception will be the Northern Plains/upper Midwest due to flooding from snowmelt. A situation that will be closely monitored, according to World Weather Inc., is an impending cold front April 21-23, which could produce freezing temps in some U.S. winter wheat areas. But World Weather warns forecast models could change with the event being a week away.
A 30,000 metric ton vessel is scheduled to leave from the Brazilian port of Santarem in the last week of April and is headed for North Carolina with a cargo of soybeans, Bloomberg News reported, citing sources familiar with the situation. This would be the first Brazilian soybean shipment to the U.S. since 2021 and comes much earlier than previous years, as record production has pushed Brazilian prices to the biggest discount relative to U.S. soybeans in nearly a decade.
China’s ag ministry issued an action plan on Friday proposing soymeal rations in animal feed are reduced to under 13% by 2025, down from 14.5% in 2022. China is trying to reduce its heavy reliance on soybean imports.
U.S. officials say the administration is mulling action against China over its shortfalls in the Phase 1 trade agreement. China has not met “a number of commitments” in the Phase 1 trade deal. Certainly the purchase agreements, but other provisions as well.”
The West still has time to remove “obstacles” hindering the implementation of the Black Sea grain deal before a deadline on May 18, senior Russian diplomat Mikhail Ulyanov said. Russia has been increasing its rhetoric that the grain deal won’t be extended unless its demands are met, including removing what it says are obstacles to grain and fertilizer exports, along with state bank Rosselkhzbank being reinstated in the SWIFT global financial communications system.
Russia’s wheat export tax for April 19-25 will be 5,759.5 rubles ($70.55) per metric ton based on an indicative price of $283.90. That’s up from a rate of 5,339.4 rubles per metric ton the previous week and the highest since late July 2022.
CORN: May corn futures are trading near the middle of this month’s range. Near-term support extends from $6.50 to Monday’s low at $6.40 1/4. Near-term resistance extends from this week’s high at $6.61 3/4 to $6.68 1/2.
SOYBEANS: May soybean futures continue to pivot around $15.00, falling below that level in overnight trade. Near-term support extends from $14.95 to Monday’s low at $14.82 1/2. Near-term resistance extends from the psychological $15.00 mark to yesterday’s spike high at $15.22 1/4.
WHEAT: After a technical breakdown on Thursday, May HRW wheat futures held support at yesterday’s low of $8.39 1/2. A drop below that level would open risk to the $8.30 area. Near-term resistance is layered from $8.49 to previous support at $8.53 1/4.
CATTLE: Widely mixed.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open with a widely mixed tone. April live cattle futures will continue to be supported by surging cash prices. But deferred futures faced corrective selling on Thursday and could be in line for more profit-taking ahead of the weekend. Cash cattle traded sharply higher for a third straight week, with prices around $175 in the Southern Plains and up to $185 (live)/$290 (dressed) in the northern market. Wholesale beef prices continued to strengthen with Choice up $1.94 to $300.42, while Select firmed $1.57 to $283.38. As we’ve noted, tightening supplies point toward even higher wholesale prices as packers try to protect their margins amid the historic runup in cash cattle prices.
HOGS: Lean hog futures are expected to open lower on followthrough selling and ongoing pressure from the weakening cash market. Futures are oversold and due for a correction, but it’s a fool’s game trying to pick a bottom in this market until the cash index puts in a bottom and starts to strengthen seasonally. The CME lean hog index is down 30 cents to $71.95 (as of April 12), falling below the January low. A spring low in the cash market hasn’t historically occurred often, but it has been more common recently, happening now four of the past six years. In each of the other three years, the sharp spring price break has led to an even stronger runup to the summer high.
