Ahead of the Open | April 19, 2023
GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 3 to 7 cents lower.
Wheat: 7 to 12 cents lower.
GENERAL COMMENTS: Corn, soybean and wheat futures pulled back from gains earlier this week amid corrective selling overnight and negative outside markets. Some hawkish Fed-speak Tuesday has dampened trader and investor spirits at mid-week. Crude oil futures are more than $1.50 lower this morning, while the U.S. dollar index is more than 350 points higher.
Inspections of vessels carrying grains from Ukrainian ports have resumed at Turkey's Bosphorus Strait after two days of discussions between Kyiv and Moscow, a spokesperson for the Joint Coordination Center in Istanbul said on Wednesday. But both countries have warned the grain export deal could be in jeopardy.
The European Union is preparing 100 million euros ($109.32 million) of compensation for farmers in countries bordering Ukraine and plans to introduce restrictions on imports of Ukrainian grain. The European Commission, which oversees trade policy in the 27-nation European Union, will take what it described as “preventative measures” for certain categories of grain and oil seeds – particularly, wheat, maize, sunflower seeds and rape seed. More details are expected later today.
Bulgaria temporarily banned imports of grain from Ukraine except those in transit to other countries. Poland reached an agreement on restarting transit of Ukrainian grains through its country as of Friday.
World Weather Inc. says, “Cold weather in the U.S. Northern and Central Plains and Midwest this weekend and Monday is not likely to hurt winter wheat in a permanent manner, but concern is rising over some early planted corn and a few fields of soybeans that have emerged. A second bout of cold is advertised to impact the U.S. Midwest during the last days of April”
Dry west-central and southwestern areas of the Plains are expected to remain mostly dry over the next two weeks. Central and eastern areas of the region should see a boost in rainfall.
CORN: May corn futures pulled back overnight after a mid-range close on Tuesday. Near-term support is the convergence of the 5-day moving average and previous resistance at $6.68 1/2. Near-term resistance is layered form Tuesday’s high at $6.82 1/2 to the January high at $6.86.
SOYBEANS: May soybean futures faced corrective selling overnight after failed to find sustained buying above the April 3 high of $15.27 3/4 during Tuesday’s session. Near-term support starts at the 5-day moving average at $15.10 1/2 and extends to the $15.00 level. Near-term resistance is in a range from $15.22 1/4 to Tuesday’s high at $15.31 1/2.
WHEAT: May HRW wheat futures are in a short-term consolidation range from last week’s low at $8.39 1/2 to this month’s high at $9.02. Given the broad boundaries, the contract could chop for a lengthy period within that range unless there’s fresh market-moving news.
CATTLE: Choppy/higher.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open mostly higher on followthrough buying after a high-range close on Tuesday and supportive cash fundamentals. But general market malaise may spark some corrective selling. Cash sources expect the cash cattle market to score an all-time high for a third consecutive week, though the pace of gains is likely to slow after surging $16.03 during that span. Choice boxed beef prices firmed $1.08 and Select gained $2.29 on Tuesday, extending their recent rallies and keeping packer margins in the black. But just as noteworthy, movement improved to 124 loads on the day. The increased movement amid the higher prices suggests retailers may fear wholesale prices are likely to keep rising.
HOGS: Lean hog futures are expected to open lower on followthrough selling after a poor close Tuesday, but the market is due for a correction so an attempt at an upside push is possible. The CME lean hog index is up 12 cents to $71.64 (as of April 14), ending the prolonged price slide. But the cash index must string together several solid days of gains before we are willing to say a low is in place. The pork cutout value firmed $1.32 on Tuesday and movement improved to 347.8 loads. With the Choice beef/pork cutout ratio at a wide 3.9, we have to believe retailers are starting to take note and should be more aggressive buyers of pork. If that’s the case, additional gains in wholesale beef prices should support the pork cutout.
