Ahead of the Open | May 11, 2023
GRAIN CALLS
Corn: 3 to 6 cents lower.
Soybeans: 8 to 12 cents lower.
Wheat: 4 to 8 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat traded lower overnight. Soybeans extended their losses after disappointing weekly export sales data. Outside markets will add a little pressure, as crude oil futures are modestly weaker and the U.S. dollar index is more than 250 points higher.
USDA reported daily soybean sales of 132,000 MT to unknown destinations for 2023-24.
Traders are preparing for Friday’s May crop reports that will feature USDA’s updated U.S. and global old-crop ending stocks, along with the first official look at the 2023-24 balance sheets. USDA will also issue its first winter wheat production estimate.
China will stabilize and diversify its soybean imports, an official with the state’s grain reserve bureau said. Lu Jingbo, deputy director at the National Food and Strategic Reserves Administration, said China will “develop new soybean source markets while stabilizing traditional soybean markets. He did not indicate whether “stabilizing” meant limiting or slowing import growth.
Brazilian crop estimating agency Conab increased its soybean crop estimate by 1.2 MMT to a record 154.8 MMT. Conab increased its corn crop forecast by 700,000 MT from last month to a record 125.5 MMT. Conab now forecasts Brazil will export 95 MMT of soybeans in 2022-23, up 700,000 MT from last month. It kept the Brazilian corn crop projection at 48 MMT despite the bigger crop estimate.
The Rosario Grain Exchange cut its Argentine soybean crop estimate by 1.5 MMT to 21.5 MMT amid lingering drought impacts. That would be the country’s smallest soybean crop since 1999. The exchange kept its Argentine corn crop estimate at 32 MMT. It also warned drought is limiting planting of the 2022-23 wheat crop.
Strategie Grains expects the EU to produce 130 MMT of wheat this year, up 1.1 MMT from its prior forecast and 3.8% above last year. The firm raised its EU wheat export forecast for 2023-24 by 300,000 MT to 31 MMT.
Export sales for the week ended May 4:
Corn: Net sales of 257,300 MT for 2022-23 increased 11% from the four-week average. There were net old-crop sales reductions of 129,400 MT to unknown destinations. USDA reported net sales of 83,100 MT for 2023-24. Traders expected sales of (100,000) to 800,000 MT for 2022-23.
Soybeans: Net sales of 62,200 MT for 2022-23 fell 79% from the previous week and 68% from the four-week average. There were net reductions of 120,200 MT to unknown destinations, 23,000 MT to Portugal and 6,000 MT to China. Traders expected sales of 150,000 to 500,000 MT for 2022-23.
Wheat: Net sales of 26,300 MT for 2022-23 was a marketing-year low. USDA reported net sales of 333,600 MT for 2023-24. Traders expected sales of 75,000 to 300,000 MT for 2022-23 and 100,000 to 325,000 MT for 2023-24.
CORN: July corn futures posted an inside day down overnight following Tuesday’s strong close. The upside will remain limited to short bouts of corrective buying without a fresh bullish catalyst. Near-term resistance extends from the 5-day moving average around $5.92 1/2 to Monday’s high at $6.00. Near-term support extends from the 10-day moving average near $5.89 to last week’s low at $5.69 1/4.
SOYBEANS: July soybean futures dropped below the psychological $14.00 mark overnight. Near-term support extends from last week’s low at $13.92 1/4 to the March low at $13.83 3/4. Near-term resistance is at $14.00 and then the 5- and 10-day moving averages at 14.16 3/4 and $14.17 3/4, respectively.
WHEAT: July HRW wheat futures are consolidating after the strong price rebound last week. Near-term resistance extends from Wednesday’s high at $8.63 3/4 to the April high at $8.86. Near-term support is in the $8.32 to $8.24 range. July SRW futures remain in the steep downtrend. The July HRW/SRW spread is historically wide at more than $2.00.
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mixed tone as traders wait on active cash cattle trade to get underway. There has been only a smattering of cash cattle trade so far this week – not enough to establish a true tone. Packers are slowing slaughter rates as market-ready supplies continue to tighten, with limited Saturday operations. That has reduced their need for supplies and slowed the seasonal decline in carcass weights. Wholesale beef prices dropped 51 cents for Choice boxes and 35 cents for Select on Wednesday, though packers moved 138 loads. Increased beef movement the past two days signals retailers are starting to buy for Memorial Day features. USDA reported net beef sales of 16,600 MT for 2023, down 18% from the previous week but up 16% from the four-week average.
HOGS: Lean hog futures are expected to open with two-sided trade. Bulls were unable to capitalize on Tuesday’s key bullish reversals as early buying faded. The CME lean hog index is up 43 cents to $75.07 (as of May 9), the highest level since the end of March. The expiring May contract finished yesterday $1.505 above today’s cash quote, while the premium in June hogs was $9.105. While the cash index has been on a steady climb over the past two-and-a-half weeks, daily gains likely need to increase to attract sustained buyer interest to summer-month futures. The pork cutout value fell 35 cents on Wednesday, while movement improved to 357.1 loads. USDA reported net pork sales of 30,000 MT for 2023, down 39% from the previous week’s marketing-year high and 28% below the four-week average.
