Ahead of the Open | March 2, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 1 to 3 cents lower.
Wheat: 2 to 4 cents higher.
GENERAL COMMENTS: Soybeans traded higher for much of the overnight session but faded late and finished slightly weaker. Corn and wheat futures posted modest corrective gains. Outside markets lean negative this morning, with the U.S. dollar index up more than 600 points, while front-month crude oil futures are just modestly firmer.
Beneficial rain fell in Argentina from Santiago del Estero to Corrientes Wednesday. A few areas received enough moisture to induce temporary improvements in crop conditions while most other areas were hot and dry and saw rising levels of crop stress. World Weather Inc. says today’s forecast is wetter overall for Argentina than what was advertised Wednesday, but many areas will not see significant improvements in crop or soil conditions as temperatures will be warm to hot during the next week and coverage of significant rain will not be widespread. World Weather says rainfall in southern Argentina is expected to increase after March 12 based on both the European and American weather models.
Brazil is expected to remain too wet in south-central areas, which will continue to slow soybean harvest and safrinha corn planting.
Russian Foreign Minister Sergei Lavrov on Thursday accused the West of “shamelessly burying” the Black Sea grain initiative, RIA Novosti news agency reported. Russia has repeatedly attacked the West’s approach to the deal, saying countries that have imposed sanctions on Moscow are not doing enough to ease restrictions on its exports, especially fertilizer. Meanwhile, U.S. Secretary of State Antony Blinken said Russia had in the past few months “deliberately and systematically” created a backlog of grain shipments while its own food, grain and fertilizer exports are ongoing. Ukraine is seeking a one-year extension of the Black Sea grain deal, which is set to expire March 18.
Feed mills in Asia are boosting corn purchases from India, as a severe drought has reduced production in traditional supplier Argentina, two traders told Reuters. Importers in Malaysia and Vietnam are booking around 200,000 MT of Indian corn a month, they said. Indian corn is quoted around $310 to $315 per metric ton, including cost and freight to Southeast Asia, compared with South American corn being offered around $330 per metric ton, traders said.
Export sales for the week ended Feb. 23:
Corn: Net sales of 823,200 MT for 2022-23 were down 20% from the previous week and 30% from the four-week average. Sales were within the range of estimates from 500,000 MT to 1 MMT. There were net reductions of 69,900 MT for China.
Soybeans: Net sales of 544,900 MT for 2022-23 were up 20% from the previous week but down 18% from the four-week average. Sales were within the range of expectations from 300,000 to 850,000 MT. China was the buyer of 176,200 MT for the week.
Wheat: Net sales of 338,800 MT for 2022-23 rose 62% from the previous week and 39% from the four-week average. Sales were in the middle of trade expectations ranging from 150,000 to 600,000 MT. There were net sales of 68,300 MT to China.
CORN: May corn futures finished high-range on Wednesday and posted followthrough gains overnight, signaling yesterday’s low may have put in a short-term bottom. Previous support at $6.48 1/4 is near-term resistance, along with the 10-day moving average around $6.56 1/2. Wednesday’s low at $6.22 1/4 is key near-term support.
SOYBEANS: May soybean futures stalled at the 5-day moving average overnight. That level at $14.99 1/2 is initial resistance, followed by the psychological $15.00 mark and previous support at $15.00 1/4. Near-term support is Tuesday’s low at $14.77 3/4, then $14.76 and $14.72.
WHEAT: May SRW wheat futures pushed above the 5-day moving average overnight. Near-term resistance is previous support at $7.20 3/4. Near-term support is Wednesday’s low at $7.01 3/4, followed by the psychological $7.00 mark.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed to mostly firmer tone, though buyer interest may be limited as traders wait on confirmation of higher cash cattle trade. So far, only light cash trade at about $1 higher prices has been reported in Iowa. The lack of cash activity has allowed cattle futures to pause as traders wait on confirmation of higher prices in other states. With futures at such lofty levels, we expect traders to remain cautious buyers despite bullish fundamentals. April live cattle finished Wednesday $1.405 above last week’s average cash cattle price. USDA reported net beef sales of 15,400 MT for 2023, down 45% from the previous week and 35% from the four-week average. China was the lead buyer at 4,300 MT.
HOGS: Lean hog futures are expected to open mostly firmer as the cash hog index continues to rise seasonally and traders have narrowed premiums, especially in the front end of the market. The CME lean hog index is up 7 cents to $78.58 (as of Feb. 28). April lean hog futures finished $6.37 above that level on Wednesday. With the futures/cash relationship now reflecting about the normal seasonal rise from now until mid-April, traders shouldn’t look to narrow the premium much more. USDA reported net pork sales of 51,900 MT for 2023, up 16% from the previous week and 39% from the four-week average. Mexico (25,000 MT) and China (12,100 MT) were the lead buyers.
