Ahead of the Open | April 4, 2023
GRAIN CALLS
Corn: 6 to 10 cents lower.
Soybeans: 8 to 12 cents lower.
Wheat: SRW steady to 2 cents higher; HRW 3 to 5 cents higher; HRS 5 to 8 cents higher.
GENERAL COMMENTS: Corn, soybean and soymeal futures extended their overnight losses at the end of the session. Wheat traded higher overnight but pulled back from the session high, with SRW finishing on its low. Outside markets are mildly supportive, with front-month crude oil futures around 50 cents higher and the U.S. dollar index modestly weaker. But based on overnight trade, outside markets won’t have much influence on grain and soy markets.
USDA rated 28% of the U.S. winter wheat crop “good” to “excellent” in its first condition ratings of the spring. That was lower than the 31% traders expected and down from 34% at the end of November and 30% last year at this time. USDA rated 36% of the crop “poor” to “very poor.” When USDA’s 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 plunged 23.3 points from last fall to 257.0. That was 15.6 points below last year at this time. The SRW CCI rating improved 3.5 points from last fall to 363.8. That was 21.6 points above last year’s rating at the beginning of April.
Snow and heavy winds will impact Northern Plains and a part of the upper Midwest today and Wednesday, with rain and some snow possible in the remainder of the upper Midwest. Snowfall of 6 to 14 inches and locally more is expected with blizzard or near blizzard conditions in some areas, according to World Weather. A severe weather outbreak is expected tonight and Wednesday across portions of the U.S. Midwest and Delta. The Delta and Tennessee River Basin as well as parts of the Carolinas and Georgia will receive heavy rain and experience local flooding possibly later this week followed by drier weather this weekend.
South American crop consultant Dr. Michael Cordonnier kept his Argentine crop estimates at 26 MMT for soybeans and 36 MMT for corn. He also kept his Brazilian crop estimates at 151 MMT for soybeans and 121 MMT for corn.
CORN: May corn futures fell below the 5- and 50-day moving averages overnight, though the uptrend from the March low remains intact. Near-term support is the 40-day moving average at $6.48 and the 10-day average near $6.47 1/2. Near-term resistance is marked by the 100-day moving average around $6.57 1/2 and the 200-day average near $6.59.
SOYBEANS: May soybean futures posted an inside day down amid corrective selling overnight. Near-term support is in the $15.03 to $14.99 range. Near-term resistance extends from Monday’s high at $15.27 3/4 to the February high at $15.49 3/4.
WHEAT: May SRW wheat futures continue to pivot around the 5-day moving average and the $7.00 level. The 10- and 20-day moving averages in the $6.90 to $6.89 area represent near-term support. Near-term resistance extends from $7.10 to $7.24.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open lower on followthrough selling after corrective losses on Monday. While futures avoided key bearish reversals, Monday’s price action signaled potential upside exhaustion. But we doubt seller interest is too strong as cash fundamentals remain strong. Last week’s average cash cattle price of $168.74 jumped $4.33 from the previous week and was the highest since January 2015. Cash sources expect more strength this week, though gains aren’t likely to be nearly as aggressive. Wholesale beef prices surged $3.02 for Choice boxes and $3.46 for Select yesterday, though movement totaled only 75 loads.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid general buyer apathy as the cash market continues to weaken. The CME lean hog index is down another 27 cents to $75.19 (as of March 31), marking the 11th straight daily decline. April lean hog futures ended Monday 66.5 cents below today’s cash quote, signaling traders have more cash weakness built into the lead contract. The pork cutout value firmed $1.04 yesterday and movement was solid at 318 loads, but the cash market likely needs to post a secondary seasonal low before buyer interest returns to hog futures.
