Ahead of the Open | March 20, 2023
GRAIN CALLS
Corn: 3 to 6 cents lower.
Soybeans: 6 to 12 cents lower.
Wheat: 5 to 10 cents lower.
GENERAL COMMENTS: Bears dominated price action overnight amid ongoing macroeconomic concerns tied to the banking sector struggles. Followthrough selling is expected on the open of daytime trade. Key will be whether funds buy the break or are active sellers. Crude oil futures are lower this morning, though well off their overnight lows. The U.S. dollar index is down more than 250 points this morning.
Swiss banking firm UBS acquired Credit Suisse over the weekend to try to stabilize the European banking system following the collapse of two big U.S. banks. However, the move did little to boost trader and investor confidence and banking stocks across the globe are sinking. Investor Mark Grant told CNBC when asked about the banking crisis: “It’s going to get worse. It’s going to be messy.” The Federal Reserve and the central banks of Britain, Canada, Japan, Switzerland and the EU announced coordinated measures to boost liquidity and “ease strains in global funding markets.” In a joint announcement, the central banks said they would switch from weekly to daily dollar auctions. The policy, which was last implemented at the beginning of the Covid-19 pandemic, will help lenders around the world access dollars, the banks said.
The Black Sea grain deal was renewed on Sunday for at least 60 days, though the actual length of the extension was uncertain. The United Nations and Turkey said the deal had been extended but did not specify for how long. Ukraine said it had been extended for 120 days. But Russia’s foreign ministry says the deal will continue under the existing parameters for 60 days and a renewal in May would hinge on certain conditions, including the restoration of access to the SWIFT financial messaging system for Russian state-owned agriculture-focused bank Rosselkhozbank, a resumption of farm machinery supplies, and the unblocking of foreign assets and accounts held by Russian agricultural companies.
Significant rain fell in southern Argentina during the weekend and central Argentina will get significant rain during the middle of this week, according to World Weather Inc. However, the rains will be too late for much of the country’s crops after prolonged drought. In Brazil, soybean harvest and safrinha corn planting are likely to advance amid drier conditions from northern Rio Grande do Sul and southern Mato Grosso do Sul through Parana and Sao Paulo to southern Minas Gerais.
AgRural reports soybean harvest advanced to 62% completed as of last Thursday, though that was still behind last year’s 69% level on that date. The firm says safrinha corn planting was 91% done, behind 97% last year, due to delays in Mato Grosso do Sul, Minas Gerais and Paraná. Producers will continue to plant safrinha corn during the second half of March but there will be acreage reductions in some regions.
World Weather says frost and freezes occurred in the Delta and southeastern U.S. overnight, inducing damage to corn and wheat, although the area impacted was small.
CORN: May corn futures fell below the 5-day moving average overnight, but stopped just shy of the 10-day average around $6.24 1/2. That level will be initial support, followed by the March 1 spike low at $6.22 1/4. The 20-day moving average around $6.36 1/2 is near-term resistance, followed by last week’s high at $6.38 3/4.
SOYBEANS: May soybean futures fell to the lowest level since Dec. 6 during overnight trade. Near-term support is at the 200-day moving average near $14.59. Near-term resistance is previous support at $14.72, $14.76 and $14.77 3/4.
WHEAT: May SRW wheat futures dropped below the 5-day moving average overnight. Near-term support is at the 10-day moving average at $6.92 1/4. Near-term resistance is at the 20-day moving average at $7.07 1/2 and last week’s high at $7.12 1/2.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mixed to mostly lower tone amid ongoing macroeconomic concerns. Last Friday’s Cattle on Feed Report was neutral, with the March 1 inventory down 4.5% from year-ago, which was in line with pre-report expectations. Both placements and marketings in February were a little shy of the average pre-report expectations at 7.2% and 4.9% under year-ago levels, respectively. The average cash cattle price dropped last week, with the official figure later this morning expected to be around $1 lower than the previous week. Choice boxed beef prices fell another 60 cents on Friday, while Select firmed 68 cents.
HOGS: Lean hog futures are expected to open with a mostly weaker tone in choppy trade amid ongoing macroeconomic unease. The CME lean hog index is up 6 cents to $80.01 (as of March 16). The pork cutout value fell $3.54 on Friday and movement totaled only 245.6 loads. While the cash market continues its slow-and-steady climb and April lean hog futures finished last Friday below today’s cash index quote, buyer interest will be limited until the product market stabilizes. China imported 380,000 MT of pork in January and February combined, up 35.8% from the same period in 2022. China’s pork imports increased late last year and are expected to climb this year, especially with the country reportedly fighting a new outbreak of African swine fever.
