Ahead of the Open | April 20, 2023
GRAIN CALLS
Corn: 6 to 10 cents lower.
Soybeans: 10 to 15 cents lower.
Wheat: SRW 8 to 12 cents lower; HRW 15 to 20 cents lower; HRS 5 to 8 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat faced active followthrough selling overnight and extended losses to session lows after USDA’s weekly exports sales data. Outside markets are mixed this morning, with front-month crude oil down nearly $1.50 and the U.S. dollar index around 200 points lower.
World Weather Inc. says HRW wheat areas will have three opportunities for rain over the next 10 days. Dry southwestern areas of the Plains will receive the least meaningful rains.
Rains across the Midwest, Delta and Southeast will limit fieldwork. Temps are also expected to be cooler than normal.
A federation of unions representing Argentina’s port and maritime workers lifted a three-day-old strike that had affected the key Rosario grains shipping hub. Export activity is expected to return to normal soon.
The Argentine government granted exporters more time to reschedule wheat shipments without penalty after the historic drought slashed production. Wheat exporters have been allowed a 360-day extension “with the start of shipment between December 1, 2022 and July 31, 2023.” The government’s previous extension, which was granted in November, covered sales with shipments beginning in the first two months of the year.
Russian grain suppliers may be able to waive a part of their export quotas so they can be redistributed to other companies, a draft regulation shows, as Moscow seeks to maximize exports and avoid domestic oversupply. According to the draft, which was opened to input from the industry on Wednesday before being finalized, exporters who have already used up their quotas will be able to claim more from companies that do not use theirs. They will not be allowed to top up their initial quota by more than 45%, however, the document says.
Export sales for the week ended April 13:
Corn: Net sales of 312,400 MT for 2022-23 dropped 41% from the previous week and 79% from the four-week average. Sales were well below the expected range of 575,000 to 850,000 MT for 2022-23. China was the lead buyer at 420,000 MT. Net sales of 422,000 MT for 2023-24 were led by China at 272,000 MT.
Soybeans: Net sales of 100,100 MT fell 71% from the previous week and were 75% below the four-week average. China was a small buyer at 35,100 MT. Traders expected old-crop sales between 250,000 and 425,000 MT. USDA reported new-crop sales of 2,900 MT.
Wheat: Net sales of 259,000 MT for 2022-23, up 91% from the previous week and 93% above the four-week average. Sales were near the upper end of pre-report expectations ranging from 0 to 300,000 MT for 2022-23. Net sales of 46,100 MT were reported for 2023-24.
CORN: May corn futures dropped below the 5-day moving average and previous resistance at $6.68 1/2 overnight, which triggered sell stops. Next support is in the $6.61 1/2 to $6.57 range, where the 10-, 20-, 100- and 200-day moving averages reside. Near-term resistance extends from the 5-day average at $6.72 to this week’s high at $6.82 1/2.
SOYBEANS: May soybean futures dropped below the 10- and 50-day moving averages, along with the psychological $15.00 mark overnight. Next support is in the $14.93 1/2 to $14.93 area, where the 20- and 40-day moving averages converge. Below that, support would extends from $14.90 to $14.82 1/2.
WHEAT: May HRW wheat futures dropped below the 50- and 100-day moving average overnight. Next support is in the $8.40 1/4 to $8.39 1/2 range. A drop below the bottom of that range would signal a downside breakout from the recent consolidation range and likely trigger fresh sell stops.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open choppy to higher. The market closed poorly yesterday despite expectations the cash market will firm again this week. Cattle futures continue to trade at sizable discounts to last week’s average cash price despite the bullish cash expectations. As is often the case in strong bull markets, cash must lead the way higher and pull futures along for the ride. The cautious trade in cattle futures is frustrating to market bulls but rather healthy, as major market tops are typically marked with a blowoff. Wholesale beef price dropped on Wednesday, with Choice down $1.14 and Select 15 cents lower. USDA reported net beef sales of 19,100 MT for 2023, up notably from the previous week and 47% above the four-week average.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid weak cash fundamentals and bearish technicals. The path of least resistance remains down, limiting the upside and keeping downside risk open. Summer-month lean hog futures continue to trade at premiums to the cash index, but traders have reduced those levels as they wait on the cash market to put in a low. The CME lean hog index is down 7 cents to $71.57 (as of April 18). While that’s a nickel above the low from two days ago, traders are far from convinced the cash index has bottomed. USDA reported net beef sales of 39,100 MT for 2023, up 33% from the previous week but down 3% from the four-week average. China bought only 200 MT of U.S. pork during the week.
