Ahead of the Open | April 18, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 6 to 10 cents higher.
Wheat: SRW 2 to 4 cents higher; HRW 2 to 4 cents lower; HRS 1 to 2 cents higher.
GENERAL COMMENTS: Soybeans posted followthrough buying overnight, while the corn and HRW wheat markets failed to sustain overnight buyer interest and faded. Outside markets are mixed with the U.S. dollar index down around 350 points and front-month crude oil futures around 50 cents lower.
The U.S. ag attaché in Argentina cut the country’s soybean production estimate to 23.9 MMT, below USDA’s official forecast, which was reduced to 27 MMT last week. The post expects Argentina to import a record 11 MMT of soybeans in 2022-23 and export only 18.75 MMT of soymeal and 3.65 MMT of soyoil during the marketing year.
Crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate 2 MMT to 24 MMT. He cut his Argentine corn crop estimate 1 MMT to 35 MMT. Cordonnier left his Brazilian crop estimates at 153 MMT for soybeans and 123 MMT for corn but noted the soybean crop figure could be increased barring “unforeseen problems in Rio Grande do Sul.”
Inspections of ships moving grain from Ukraine have restarted, RIA news agency reported, citing Russia’s foreign ministry. However, a senior Ukrainian official told Reuters, “Nothing has been resolved. There are no inspections.”
USDA rated 27% of the U.S. winter wheat crop as “good” to “excellent” as of Sunday, unchanged from last week. However, the “poor” to “very poor” rating increased two percentage points to 39%. 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 another 3.2 points to 248.0. The Kansas crop improved a little over the past week, but each of the other states declined. The SRW crop improved 12.5 points to 381.4, led by a 4.5-point increase in Illinois. The HRW crop is rated historically low, while the SRW crop is rated higher than average for mid-April.
World Weather Inc. say freezes are still expected in HRW wheat areas this coming weekend, occurring as far south as Oklahoma. Freezes will also occur in the Midwest, northern Delta and as far south as Kentucky with frost in Tennessee late in this coming weekend. West-central and southwestern U.S. Plains may get some showers as colder air arrives late this week and there “may” be some potential for showers again as warmer air returns next week.
Flooding in the Red River Valley may not be as bad as feared as precipitation will be limited during the next few weeks and cold temps will slow snowmelt.
CORN: May corn futures pushed to a new high for the month on Monday but failed to sustain followthrough buying overnight. Near-term resistance is at the January high of $6.86. Above that, bulls would target $7.00. Near-term support is previous resistance at $6.68 1/2.
SOYBEANS: May soybean futures poked above the April 3 high at $15.27 3/4 overnight but failed to find sustained buying at that level. The overnight high at $15.31 1/2 is initial resistance, with additional resistance layered from $15.38 1/2 to the February high at $15.39 3/4. Near-term support is in the $15.10 to $15.00 range.
WHEAT: May HRW wheat futures reached $8.98 3/4 overnight before fading. That will be initial resistance, followed by the psychological $9.00 level and this month’s high at $9.02. Near-term support starts at the 200-day moving average around $8.84.
CATTLE: Higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open higher on followthrough buying after a strong close on Monday and support from surging cash cattle prices. Cash cattle averaged a record high $180.44 last week, a $7.34 surge from the previous week. Packers bought 87,000 head last week, including 22,000 head “with time.” Typically, that would suggest packers would back off cash cattle bids the following week. But with feedlots current and carcass weights declining, there aren’t enough supplies to fill needs. As a result, the cash market is expected to post another record high this week. Wholesale beef prices also continue to charge higher, rising $3.36 for Choice and $5.45 for Select on Monday. Strong wholesale prices are allowing packers to keep margins in the black, increasing incentive for them to continue to actively compete for cash cattle.
HOGS: Lean hog futures are expected to open with a mixed tone. There could be some additional buyer interest after two days of corrective buying, but the continued decline in the cash market and premiums over the cash index will limit the upside. The CME lean hog index is down another 11 cents today. May hogs assumed lead-month status at a $9.48 premium to today’s cash index quote (as of April 14). June hogs finished Monday $16.655 above the cash index. Given those premiums, buyer interest will be limited until the cash index signals it has bottomed. The pork cutout value fell 64 cents on Monday, widening the Choice beef/pork cutout ratio to more than 3.9.
China imported 150,000 MT of pork in March, up 11.2% from last year. During the first three months of this year, China imported 530,000 MT of pork, up 27.7% from the same period last year. Meanwhile, China’s first quarter pork production hit a five-year high as a spike in African swine fever outbreaks caused producers to cull hogs.
