Ahead of the Open | April 26, 2023
GRAIN CALLS
Corn: 1 cent lower (new-crop) to 2 cents higher (old-crop).
Soybeans: Steady to 2 cents higher.
Wheat: SRW 1 to 3 cents higher; HRW 2 to 5 cents lower; HRS 5 to 10 cents lower.
GENERAL COMMENTS: Corn, soybean and SRW wheat futures are expected to favor the upside this morning amid corrective buying, though buyer interest will be limited. Bears have momentum on their side and fresh supportive news is lacking. HRW and spring wheat futures failed to find sustained corrective buying overnight and faded. Those markets will face pressure this morning. Outside markets are mixed, with crude oil and the U.S. dollar index both lower.
Rains fell on HRW wheat areas overnight and will continue through Friday. These will be the first significant rains for southwestern areas of the region in quite some time.
The Corn Belt, Plains and Delta will trend cooler than normal over the next week to 10 days before warmer temperatures are expected.
Moscow has seen “practically no results” from a pact with the United Nations that aimed to help Russia’s grain and fertilizer exports and blamed Western countries for creating a deadlock. Russia’s envoy to the United Nations reiterated the country needs to see progress on issues it has raised or there will be no extension of the deal beyond May 18.
United Nations Secretary-General António Guterres is scheduled to travel to Washington today to meet with Secretary of State Antony Blinken and members of Congress, where he will discuss the war in Ukraine and the Black Sea grain deal.
Canadian farmers intend to plant 27.0 million acres to wheat, up 1.6 million acres (6.3%) from year-ago and 700,000 acres more than traders expected. Canola plantings are expected to rise 200,000 acres from last year to 21.6 million acres, though that’s 200,000 acres less than anticipated.
CORN: July corn futures posted corrective gains overnight after finishing well off session lows on Tuesday. Near-term resistance starts at the 5-day moving average just above $6.13 and then previous support at $6.15 3/4. Near-term support is at Tuesday’s low at $6.01 and the March low at $5.97.
SOYBEANS: July soybean futures posted a modest inside day up overnight. The 5-day moving average at $14.38 1/4 will serve as initial resistance. Near-term support is at Tuesday’s low of $14.11 1/4 and then the March low at $13.83 3/4.
WHEAT: July HRW wheat futures remain fully bearish, trading below the short-, intermediate and long-term moving averages. Tuesday’s low at $7.94 is near-term support. Near-term resistance is at the 5-day moving average at $8.15 1/4.
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mixed tone this morning as traders wait on cash cattle trade to develop. Packers have been slow to establish initial bids, suggesting active cash trade won’t be seen until late this week. Cash sources are mixed in their opinions of the likely outcome, with some anticipating mildly weaker prices and others indicating feedlots won’t sell at anything less than steady prices with last week. Choice boxed beef prices firmed 51 cents while Select dropped $1.08 on Tuesday. Of greater note was movement that increased to 141 loads. Traders will watch to see if this was a short-term spike in retailer buying or if stronger movement continues. Tuesday’s Cold Storage Report showed beef stocks declined more than average during March. While that implies demand is adequate given tightening supplies, we doubt the data will have much market impact.
HOGS: Lean hog futures are expected to trade on both sides of unchanged this morning. The CME lean hog index is 2 cents higher to $71.20 (as of April 24). That’s far from enough for traders to get excited about, but even with hog supplies running stronger than USDA’s Hogs & Pigs Report indicated, the cash market will bottom at some point and start a seasonal climb to the summertime high. Given current premiums in futures, the cash market likely has to show solid strength to attract sustained buyer interest. The pork cutout value dropped 27 cents on Tuesday, though movement improved to 403.3 loads. The surge in movement is the first sign the market has flashed that prices might be low enough to encourage active retailer buying. The Cold Storage data showed pork stocks climbed contra-seasonally in March, suggesting demand isn’t keeping pace with supplies. That’s yet another hurdle bulls must clear.
