Ahead of the Open | March 21, 2024
GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 3 to 5 cents higher.
Wheat: SRW 4 to 6 cents higher; HRW 1 to 3 cents higher; HRS 5 to 7 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each favored the upside overnight, though corn and soy went into the break well off session highs. Grains were supported by the gold market surging to an all-time high overnight. Front-month crude oil futures continue to face profit taking from recent highs, while the U.S. dollar index reversed some of Wednesday’s losses.
China’s grain and oilseed imports will remain near record highs this year despite a recent spate of cancellations as lower global prices and a domestic output shortfall prompt purchases. China recently canceled a combined 1.5 MMT of Australian and U.S. wheat purchases, raising concerns about reduced demand. But traders told Reuters the cancellations will not impact overall demand as lower wheat prices will spur buying, along with more government funds allocated to boost grain and oilseed stockpiles.
China may ask its soybean crushers to prioritize local supplies as it seeks to reduce the reliance on imports. Beijing is discussing plans for some crushers to process specific amounts of domestic beans this year, people familiar with the matter told Bloomberg. However, the plan isn’t yet finalized and might still change, said the people. China has increased its domestic soybean production in recent years but still imports more than 80% of its consumption needs.
House and Senate leaders released the six-bill, 1,012-page second minibus package just before 2 a.m. CT. They are now “rushing” to get a floor vote in the House Friday (Speaker Mike Johnson is waiving the 72-hour rule), followed by a Senate vote to avoid a partial government shutdown at midnight Friday. Democrats got a win via 12,000 Special Immigrant Visas for Afghans who helped the U.S. during the long war in that embattled country, as well as more money for childcare. Republicans are touting language saving gas stoves, increasing the number of ICE detention beds, more border patrol agents, cuts to foreign aid and preventing the State Department from flying non-sanctioned flags at U.S. diplomatic compounds.
Export sales for the week ended Mar. 14:
Corn: Net sales of 1.186 MMT for 2023-24, down 8% from the previous week but up 10% from the four-week average. Increases came primarily for Japan and Mexico. Exports of 1.529 MMT were a marketing year high. Traders expected net sales between 800,000 MT and 1.4 MMT.
Soybeans: Net sales of 494,000 MT for 2023-24, up 31% from the previous week and 86% from the four-week average. Increases came primarily for Mexico and Indonesia. Sales were in the middle of expectations ranging from 250,000 to 800,000 MT.
Wheat: Net sales reductions of 109,600 MT for 2023-24, - a marketing year low and down noticeably from the previous week and four-week average. Increases came primarily for Japan and Mexico, though were offset my net reductions of 262,700 MT, which were known from daily cancellations reported last week. Traders expected net sales between -200,000 to 500,000 MT.
CORN: May corn futures posted gains overnight. Stiff resistance at the 40-day moving average, currently at $4.42, capped most gains overnight. Further resistance stands at $4.45 3/4, then $4.50. Support comes in at $4.38 1/2, the 20-day moving average at $4.36 1/4, then $4.33 3/4.
SOYBEANS: May soybean futures posted followthrough gains overnight, though went into the break well off session highs. Resistance stands at $12.17 1/2, then the overnight high of $12.26 3/4. Further buying sees resistance at $12.32 3/4. Strong support is layered from the psychological $12.00 mark down to the 40-day moving average at $11.96 1/4. Further selling eyes support at $11.85 1/2.
WHEAT: May SRW futures posted modest gains overnight. Initial resistance at $5.53, the 20-day moving average, capped gains overnight. Further resistance stands at $5.57 3/4 then $5.59. Support comes in at $5.45 1/2, the 10-day moving average, which is backed by $5.42, then $5.37.
CATTLE: Mixed.
HOGS: Lower.
CATTLE: Live cattle futures and feeders are expected to open with a mixed tone as uncertainty over the cash cattle outlook persists. Technical resistance continues to limit gains in April live cattle futures, though prices are nearing support, which is likely to translate to tight trading ranges ahead of tomorrow’s USDA Cattle on Feed Report. Cash trade thus far this week has been minimal, with small lots trading at steady prices in Kansas. Most feedlots in the Southern Plains passed on steady bids in hopes of firmer prices. Bids were relatively nonexistent in the northern market, where prices have moved premium to the Southern Plains. Wholesale beef prices were mixed on Wednesday, as Choice cutout rose 22 cents to $313.44 and Select dropped 47 cents to $302.71. USDA reported net beef sales of 11,000 MT for 2024, - a marketing-year low, down 2% from the previous week and 12% from the four-week average.
HOGS: Lean hog futures are expected to open with a weaker tone in continuation of the weakness seen thus far this week. April futures have closed lower for three consecutive sessions, after being unable to clear trendline resistance stemming from the February high. Futures continue to falter despite continued strength in the CME lean hog index, which is up another 39 cents to $83.21 today (as of Mar. 19). As of Wednesday’s close, the premium held in April lean hog futures dropped to $2.09 to today’s cash quote. Despite technical weakness, strength in the index is likely to limit losses in futures after the open today. Weakening wholesale prices this week have weighed on futures. Pork cutout fell another $1.19 to $92.18 Wednesday, led lower by ribs, though each cut posted losses. USDA reported net pork sales of 33,800 MT for 2024, which were up 36% from the previous week and 10% from the four-week average.
