Ahead of the Open | May 3, 2023
GRAIN CALLS
Corn: 2 to 5 cents lower.
Soybeans: 5 to 10 cents lower.
Wheat: Winter wheat 8 to 12 cents higher; spring wheat 2 to 4 cents higher.
GENERAL COMMENTS: Wheat futures rebounded on corrective buying late in the overnight session, which should encourage additional short-covering during daytime trade. But with broad risk aversion ahead of this afternoon’s Fed decision on monetary policy, we aren’t confident the corrective buying will be sustained. Front-month crude oil futures are more than $2.00 lower this morning while the U.S. dollar index is nearly 350 points lower.
The Fed is widely expected to raise benchmark interest rates another 25 basis points at the conclusion of the two-day Federal Open Market Committee meeting this afternoon. Traders will closely dissect the post-meeting comments and Chair Jerome Powell’s comments for indications of whether the Fed intends to keep tightening or pause.
A group of crop experts projected Oklahoma’s drought-damaged winter wheat crop at 54.3 million bu., with an average yield of 24.6 bu. per acre, following an annual tour of the state. However, the average wheat production estimate among members surveyed at a meeting of the Oklahoma Grain & Feed Association was much lower at 40.7 million bushels. In 2022, Oklahoma produced a winter wheat crop of 68.6 million bu. on an average yield of 28 bu. per acre.
Russian officials said talks on the Black Sea grain deal will take place on Friday. Originally, reports indicated those talks would be today. Russia continues to say it has no plans to extend the deal unless there are concessions to its requests to free up exports of its grains and fertilizers.
CORN: July corn futures took out last week’s low overnight, falling to the lowest level since January 2022. Next support is in the $5.67 to $5.49 range. Resistance is layered from $5.75 to $5.91.
SOYBEANS: July soybean futures faced followthrough selling after a bearish outside day down on Tuesday. Near-term support extends from last week’s low at $13.96 1/2 to the March low at $13.83 3/4. The 5-day moving average around $14.12 1/2 is near-term resistance.
WHEAT: July HRW wheat futures are heavily oversold but showing no signs of a bottom. Initial support is at Tuesday’s low of $7.36 1/4, which was the lowest level since January 2022. Below that, support would be in the $7.32 to $7.28 range. Near-term resistance is in the $7.56 to $7.64 range.
CATTLE: Lower.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open lower on followthrough selling after a sharply lower and low-range close on Tuesday. Cash cattle started trading at $1 lower prices in the Southern Plains, while wholesale beef prices continued their recent pullback on Tuesday with Choice down 78 cents and Select $2.34 weaker. Weakening cash fundamentals give traders added incentive to take profits out of the long side of the market. While supply-side fundamentals remain strong, cattle futures, the cash market and wholesale beef prices all appear like they have posted seasonal tops.
HOGS: Lean hog futures are expected to open with a mixed tone. While cash fundamentals are starting to firm seasonally, futures still hold sizable premiums to the cash index. The CME lean hog index is up 92 cents to $73.02 (as of May 1), the highest price since April 4. The pork cutout value firmed $1.61 on Tuesday to $82.08, the highest price since March 16. With cash fundamentals firming, the recent narrowing of spreads between futures and the cash index should slow, though traders may want to see sustained strength before they add to premiums.
