Ahead of the Open | April 5, 2023
GRAIN CALLS
Corn: 3 to 6 cents lower.
Soybeans: 6 to 12 cents lower.
Wheat: 12 to 20 cents lower.
GENERAL COMMENTS: Wheat futures led overnight losses in the grain and soy markets amid a lack of bullish news and prospects for improved weather in the Plains and Midwest. Key during daytime trade will be whether funds add to the overnight weakness by actively selling or use the price break as a fresh buying opportunity. Outside markets will provide little guidance, with front-month crude oil futures and the U.S. dollar both marginally weaker this morning.
USDA reported daily sales totaling 125,000 MT of corn and 276,000 MT of soybeans – both to unknown destinations for 2022-23.
Strong winds, extremely low humidity and hot temps were noted across the southwestern Plains on Tuesday, further stressing the already-struggling HRW wheat crop. Forecasts models are signaling wetter conditions for central and eastern HRW areas during the second week of the forecast period. Southwestern areas of the region are expected to remain dry.
Heavy snow fell Tuesday from South Dakota to Minnesota with totals of 4 to 11 inches common and local amounts up to 14 inches. The snow will linger in northern parts of eastern North Dakota and northern Minnesota today.
Midwest crop areas outside of the far northwest will experience warm and dry weather this weekend and especially next week. Delta crop areas will also see some improved opportunity for planting. Odds are high rain will develop in the Plains and western two-thirds of the Midwest late in the second week and into the third week of the forecast period, according to World Weather Inc.
CORN: May corn futures dipped below the 10-day moving average overnight but failed to find followthrough selling and found support at the 40-day moving average around $6.47 1/2. Violation of that level would likely attract fresh chart-based and fund selling. Next support would be in the $6.44 3/4 to $6.36 3/4 range. Near-term resistance is layered from $6.53 1/2 to $6.57 1/2.
SOYBEANS: May soybean futures traded within Tuesday’s boundaries overnight while extending yesterday’s price pullback. Near-term support is at the 5-day moving average around $15.06, the 50-day average near $15.03 1/2 and the 40-day average at $15.00 1/2. Monday’s high at $15.27 3/4 stands as solid near-term resistance.
WHEAT: May SRW wheat futures violated the 5-, 10- and 20-day moving averages overnight, which triggered chart-based selling and opens risk to the recent lows in the $6.61 to $6.54 range. Near-term resistance is heavily layered from $6.81 to $7.24.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone in choppy trade as traders wait on cash cattle trade to develop. Cash negotiations have been limited with feedlots seeking higher prices while packers have been slow to establish bids. Given the market holiday on Friday, packers and feedlots may try to accelerate cash negotiations, though it’s unlikely there will be active trade until Thursday unless packers raise bids. Choice boxed beef prices firmed $2.85 on Tuesday, the third straight daily increase totaling $8.74 during that span. Select beef also firmed $3.77 yesterday and is up $9.49 over the past three days. While movement hasn’t been overly strong, packers have padded their margins in preparation for paying higher cash prices this spring as market-ready supplies tighten.
HOGS: Lean hog futures are expected to open with a weaker tone amid eroding cash fundamentals and bearish attitudes. The CME lean hog index is down another 52 cents, marking the 12th straight daily decline. The pork cutout value fell $1.47 on Tuesday, dropping to the lowest level since December 2020. Falling cash fundamentals are allowing traders to maintain their pessimistic attitudes toward lean hog futures. While futures are oversold and due for a correction, traders have viewed even a modest intra-day uptick in prices as a selling opportunity. Until cash fundamentals show signs of bottoming, we doubt that will change.
