Ahead of the Open | April 5, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 1 to 3 cents lower.
Wheat: SRW 10 to 13 cents higher; HRW 5 to 7 cents higher; HRS 4 to 6 cents higher.
GENERAL COMMENTS: Strong gains in wheat led the corn market modestly higher overnight, while soybeans continued to struggle against technical resistance. Each saw increased selling into the break. Strong jobs data led to modest volatility in outside markets this morning. Bonds saw sharp losses following the number, leading to higher interest rates, as strong jobs data draws into question whether the Fed can cut interest rates this summer. Front-month crude oil futures are trading modestly higher, while the U.S. dollar index is over 400 points higher, strengthened by higher interest rates.
The U.S. economy added 303k jobs in March, the most in ten months and above expectations of 200k, according to the Bureau of Labor Statistics. Jobs added for February were revised to 270k, down from 275k and a much more modest revision that recent months. The unemployment rate fell below expectations of 3.9% to 3.8% and was 0.1% below February.
The U.S. Corps of Engineers announced plans to reopen the Port of Baltimore, which was closed due to wreckage from cargo ship Dali and collapse of a section of the Francis Scott Key Bridge. It aims to have limited access (280-foot wide and 35-foot deep) channel restored by the end of April and full shipping capabilities by the end of May. Weather conditions and complexities in the wreckage may affect this timeline.
Two grain cargoes loaded by Russia’s RIF have received phytosanitary certificates, a company source told Reuters. One of the ships, loaded with 65,000 MT of wheat for Egypt’s state grain buyer, has been released from a port in Russia after being detained amid a dispute between Russian authorities and an exporter, according to the company and two sources with direct knowledge of the matter. The other cargo of 40,000 MT of grain, is not destined for Egypt and remains at a Russian port.
As of April 1, France’s ag ministry rated the country’s wheat crop as 65% good or excellent, down one point from the previous week and well below last year’s 93% level. The French wheat crop continues to be rated the lowest since 2020. Good/excellent ratings declined to 66% for winter barley and 70% for durum wheat, down one and three points, respectively, and also a four-year low for both crops. For spring barley, the ag ministry’s first rating pegged 61% of the crop as good/excellent, the worst for this time of year on records back to 2012.
CORN: May corn futures saw spillover strength from wheat overnight. Resistance stands at the 40-day moving average, currently at $4.39, which has capped most of the upside since mid-March. Further buying targets resistance at $4.41 3/4, then last week’s high of $4.48. Selling pressure finds support at $4.35, $4.31 3/4, with significant backing from $4.26 1/2.
SOYBEANS: May soybean futures continue to trend lower on the daily bar chart. Prices continue to be pinned to downtrend line resistance, currently at $11.80. Further resistance stands at the 10-day moving average at $11.85 1/2, then $11.92 3/4. Support stands at $11.74, this week’s low of $11.71, then $11.55 3/4.
WHEAT: May SRW futures surged higher overnight. Prices continue to trend higher in a volatile but modest uptrend from the March low. Initial resistance stands at the overnight high at $5.74 1/2, which is backed by $5.79 1/4, then $5.84 1/4. Support comes in at $5.63, the 40-day moving average at $5.63 3/4, which has capped nearly all of the upside this year. Further selling finds support at $5.50, then $5.44 1/4.
CATTLE: Choppy/lower.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open lower amid weak technicals and cash fundamentals. The relative performance in the cash cattle market could limit seller interest after the open. Cash cattle prices have fallen $1.24 from last week’s average, while nearby April futures are $3.525 below last Friday’s close. April futures continue to trade at a sharp discount to the cash market as well, which could support prices after the open. Wholesale beef prices continue to plunge, pushing packer margins further into the red. Choice cutout fell $4.15 to $297.15, below the psychologically significant $300.00 mark. Select dropped 87 cents to $296.05, bringing the Choice/Select spread to a ultra-thin $1.10.
HOGS: Lean hog futures are expected to open higher on robust strength in cash fundamentals. The CME lean hog index is up another 73 cents to $85.88, the largest daily gain since Feb. 21. The index has strengthened $20.83 since the seasonal low at the start of this year. Traders now anticipate robust strength until the April contract’s expiration next Friday, as the contract is $2.35 above the most recent index quote. Wholesale pork prices surged to a fresh for-the-move high, rising $3.24 to $98.15 on Thursday, led by an $11.53 jump in primal bellies, though all cuts except ribs posted strong daily gains. Rising wholesale prices have offset strength seen in cash hog prices, maintaining packer margins firmly in the black.
