Ahead of the Open | March 19, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 3 to 5 cents lower.
Wheat: SRW 7 to 9 cents higher; HRW 10 to 12 cents higher; HRS 6 to 8 cents higher.
GENERAL COMMENTS: Wheat led the way higher, soybeans faced selling pressure and corn was caught in the middle overnight. Outside markets were relatively quiet overnight, as front-month crude oil futures traded sideways though on recent highs. The U.S. dollar index traded around 325 points higher and the highest mark in two weeks. The dollar has been supported by increasing interest rates, which started to rebound early last week.
South American crop consultant Dr. Michael Cordonnier raised his Argentine soybean and corn crop estimates 1 MMT to each to 51 MMT and 55 MMT, respectively. For soybeans, Cordonnier noted recent rains and improved crop condition ratings for his increase. For corn, he cited early yields and benign weather. In Brazil, Cordonnier left his crop forecasts at 145 MMT for soybeans and 112 MMT for corn, while maintaining a neutral-to-lower bias toward both.
The European Union is preparing to levy tariffs on grain imports from Russia and Belarus to placate farmers and some member states, the Financial Times (FT) reported citing people familiar with the plans. Reuters reported the tariffs would apply to only grains to be used in the EU and not on grains transported through the bloc to other countries so as not to undermine food security elsewhere. The European Commission is expected to impose a duty of 95 euros ($103.26) per metric tons on cereal grains from Russia and Belarus, FT said, adding that tariffs of 50% would also be placed on oilseeds and derived products. An EU official told Reuters those figures were “about right,” though they were still being finalized. Russia said the time frame of tariffs and other details needed to be clear before Russia would make a decision on its response.
The Australian Bureau of Meteorology says atmospheric indicators are consistent with a decaying El Niño and climate conditions will be neutral. The bureau noted four out of seven climate models indicating the central Pacific is likely to return to neutral El Niño–Southern Oscillation (ENSO) levels by the end of April and all models indicating neutral in May. The bureau warned, “while three out of seven international models are predicting a La Niña by late winter (northern hemisphere summer), El Niño and La Niña predictions made in early autumn tend to have lower accuracy than predictions made at other times of the year. This means that current forecasts of the ENSO state beyond May should be used with caution.” Last week the U.S. Climate Prediction Center said there are 83% odds of ENSO-neutral conditions in the April-June period, with 62% chances of La Niña developing during June to August.
CORN: May corn futures continue to be caught between wheat strength and soy weakness. Bulls are seeking to overcome resistance at $4.38 before tackling firm resistance at the 40-day moving average at $4.42. Support comes in at $4.35 3/4 then $4.31 3/4.
SOYBEANS: May soybean futures continued lower overnight. Bulls are seeking to break price back above 40-day moving average resistance at $11.94 1/2, which is backed by the psychological $12.00 mark. Losses were pared by 10-day moving average support at $11.83 overnight, further selling eyes support at $11.79 3/4, then $11.66.
WHEAT: May SRW futures continued higher overnight. Gains paused just shy of downtrend line resistance at $5.51 overnight, which is backed by the 20-day moving average at $5.54, then $5.69. Initial support stands at $5.44 1/4, with little backing until $5.28 1/2.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, though technical resistance could limit gains after the open. The cash market continues to provide robust underlying support for futures, as last week’s average price was the second highest mark ever, rising $2.35 from the previous week to $187.47. Packers purchased a strong 83,000 head last week, the second consecutive week of large purchases. Still, cash sources expect steady/firmer prices once again this week, though USDA’s Cattle on Feed Report is out Friday afternoon, which is likely to push active trade late into the week. Wholesale beef prices continue to show impressive strength, even as dressed weights rebound. Choice cutout was up $1.43 to $313.33 and Select rose 65 cents to $303.05 on Monday.
HOGS: Lean hog futures are expected to open with a mostly firmer tone as seasonal gains persist in the cash market. The CME lean hog index is up another 20 cents to $82.54 (as of March 15). While the daily gains in the cash market haven’t been strong, the seasonal increase has remained persistent. The $4.285 premium April futures hold the index could limit buying interest after the open today, though deferred contracts continue to show relative strength, signaling the optimism traders continue to hold in the overall marketplace. Wholesale pork prices slipped 31 cents to $93.16 on Monday after posting gains at midsession. Hams led cutout lower as grocer demand ahead of Easter has likely tapered off, while bellies showed relative strength.
