Ahead of the Open | March 28, 2023
GRAIN CALLS
Corn: Steady to 1 cent lower.
Soybeans: 6 to 10 cents higher.
Wheat: 3 to 7 cents higher.
GENERAL COMMENTS: Corn futures posted mild corrective losses overnight but could be boosted by another daily export sale. Soybeans and wheat extended Monday’s strong gains after two-sided trade earlier in the overnight session. The U.S. dollar index is down around 350 points, which should add some support. Front-month crude oil futures are near unchanged.
USDA announced another daily old-crop corn sale, this time 136,000 MT to China. This marked the sixth straight day with an old-crop corn sale and 10 of the last 11 days. During that span, there have been 3 MMT of daily corn sales – all to China aside from 112,800 MT to unknown destinations.
Individual state crop conditions ratings showed modest improvement in the HRW wheat crop during March. The “good” to “excellent” ratings for HRW wheat stood at 19% in Kansas (unchanged from the end of February), 34% in Oklahoma (down two points), 18% in Texas (down one point), 28% in Colorado (down one point), 22% in Nebraska (up three points), 22% in South Dakota (down one point) and 31% in Montana (up 10 points). When the updated crop condition ratings were plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the HRW crop improved 3.4 points from the end of February to a rating of 267.5. The HRW crop went into dormancy with the lowest fall CCI rating on record of 280.3. USDA will release its first national winter wheat ratings of the spring next Monday.
World Weather Inc. says U.S. HRW wheat areas in the southwestern Plains will remain dry over the next 10 days.
Argentina received its best rains of the growing season last week. While they were too late for some of the crop, the rains should help later-maturing soybeans and corn. As a result, South American crop consultant Dr. Michael Cordonnier left his Argentine soybean and corn crop estimates at 26 MMT and 36 MMT, respectively. Cordonnier also left his Brazilian production estimates unchanged at 151 MMT for soybeans and 121 MMT for corn.
World Weather says Argentina’s weather will be favorably mixed with next week being the wettest. Brazil’s weather will also be favorably mixed with net drying continuing for a while longer in center-south crop areas favoring late-season soybean harvesting and safrinha corn development.
CORN: The technical picture for May corn has improved with yesterday’s price action featuring an upside breakout from the inverted head-and-shoulders formation. That would project the contract to the $6.85 area – basically back to the top of the previous sideways range. Near-term support is in the $6.41 to $6.36 range.
SOYBEANS: May soybean futures extended the corrective gains from the two previous trading sessions overnight. The contract appears to be forming a “V” bottom on the daily chart. Near-term resistance is the 200-day moving average at $14.56 1/4, followed by the 10-day average around $14.60. The 5-day average around $14.38 is near-term support.
WHEAT: May SRW wheat futures is pivoting around the $7.00 mark. Near-term resistance starts at $7.06 1/2 and extends to $7.12 1/2. The 20-day moving average at $6.92 1/4 and the 10-day average around $6.91 will serve as near-term support.
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open higher on followthrough buying after a strong close on Monday. Cash cattle averaged $164.41 last week, up 24 cents from the previous week. While packers bought a strong 85,000 head of cattle, including 21,000 for delayed delivery, cash sources expect prices to be steady/firmer again this week amid tight market-ready supplies. April live cattle futures pushed out to a slight premium to the cash market with Monday’s strong gains, though the higher cash expectations open the door for more upside. However, with cash cattle not likely to trade until late in the week, we wouldn’t be surprised to see a corrective pullback if early buyer interest is limited.
HOGS: Lean hog futures are expected to open higher on followthrough buying, though choppy trade is possible as futures backed well off their highs on Monday’s close and the cash market dropped again. The CME lean hog index is down another 42 cents to $76.57 (as of March 24), the sixth straight daily decline. The weakening cash market along with strong gains in futures on Monday pushed the April contract to a $2.055 premium to today’s cash quote. Traders will likely want to see the cash market stabilize before they build in much more premium. The pork cutout value firmed 17 cents on Monday, though that was well off the morning high. Movement totaled 349 loads.
