Ahead of the Open | May 2, 2023
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 4 to 8 cents higher
Wheat: 4 to 6 cents lower
GENERAL COMMENTS: Corn and wheat reversed from early overnight highs, turning lower, while soybeans ended the overnight session moderately higher. Outside markets are continuing to prove unsupportive, with front-month crude oil futures down around 75 cents, while the U.S. dollar index is extending higher.
USDA reported corn planting was in line with the five-year average at 26% done. Corn emergence was one point ahead of average at 6%. Planting and emergence have been slowed in the northern states by cold temps, excess moisture and flooding, while other states are running ahead of average.
USDA reported soybean planting was eight points ahead of average at 19% completed.
Crop consultant Dr. Michael Cordonnier kept his U.S. corn and soybean production estimates at 15.03 billion bu. and 4.53 billion bu., respectively. He has a neutral to lower bias for both corn acreage and yield, noting flooding, saturated soils and slow planting in the northwestern Corn Belt. He has a neutral to higher bias for soybean acreage, saying soybeans could pick up some originally intended corn acres in the northwestern Corn Belt.
USDA rated 28% of the winter wheat crop “good” to “excellent,” up two points from the previous week. But the portion of crop rated “poor” to “very poor” increased one point to 42%. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 1.8 points to a historically low 242.8. While the wheat crops in Oklahoma, Colorado and Montana showed modest improvement, the other states declined. The SRW crop slipped 2.2 points but remained above average with a CCI rating of 374.2.
World Weather Inc. notes April rainfall was lighter than usual across a huge portion of the contiguous United States. This theme should prevail through the month of May, with temperatures trending warmer for many areas relative to that of last month. The forecaster indicates as time moves along during late spring and summer, the drier bias is expected to become more consolidated in central parts of the nation, but the impact on summer crops will largely be determined by temperatures.
Cordonnier kept his Brazilian and Argentine soybean and corn crop estimates unchanged. In Brazil, he forecasts production at 153 MMT for soybeans and 123 MMT for corn. Soybean harvest is nearing completion, so focus will be on weather for the safrinha corn crop, which has been favorable to date. For Argentina, Cordonnier estimates production at 23 MMT for soybeans and 36 MMT for corn. He has a neutral to lower bias toward both crops.
CORN: July corn futures traded narrowly after an overnight test of initial resistance of $5.88 3/4. Additional resistance stands around $5.93. Near-term support lies near $5.82 and last Friday’s low of $5.72.
SOYBEANS: July soybean futures ended the overnight session above resistance at $14.33 1/2, with $14.29 1/2 and $14.49 3/4 serving as the next levels of resistance. Support lies at $14.23 1/4 and $14.17 1/4.
WHEAT: July HRW wheat futures ended the overnight session on the low, but above initial support at $6.09 1/2, with $6.00 3/4 serving as additional support. Resistance stands at $6.31 and then $6.43 3/4.
CATTLE: Mixed.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open with a mixed tone in two-sided trade. Bulls were unable to sustain earlier buyer interest on Monday and the market faded to a lower close, which could stir up some followthrough selling. Cash cattle averaged $177.15 last week, down $1.42, and are expected to weaken again this week. But futures are trading well below that level, so seller interest should be limited. Choice boxed beef prices fell $1.42 on Monday, but with prices still above $310.00, packers moved only 78 loads on the day. With beef production down amid tight market-ready supplies and falling carcass weights, retail prices aren’t likely to fall sharply.
HOGS: Lean hog futures are expected to open lower on followthrough selling after sizable losses on Monday. The combination of losses in hog futures on Monday and a 61-cent gain in the CME lean hog index today (as of April 28) has narrowed premiums to the cash market. Still, May hog futures finished Monday $7.20 above today’s cash quote, while the June contract held a $17.60 premium. Those still-hefty premiums could trigger additional selling pressure on futures. The pork cutout value dropped 85 cents on Monday, while movement was a modest 267.9 loads.
