Ahead of the Open | March 26, 2024
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 5 to 7 cents lower.
Wheat: SRW steady to 2 cents lower; HRW 4 to 6 cents lower; HRS 3 to 5 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each faced mild price pressure in a relatively quiet overnight session. Trade so far this week has been largely positioning ahead of Thursday’s USDA reports. Outside markets were supportive overnight, as front-month crude oil futures continue to trend higher and the U.S. dollar index posted modest losses and is currently trading around 130 points lower.
South American crop consultant Dr. Michael Cordonnier left his Brazilian crop estimates at 145 MMT for soybeans and 112 MMT for corn, maintaining his neutral/lower bias toward both. Cordonnier left his Argentine crop forecasts at 51 MMT for soybeans and 55 MMT for corn, with a neutral/slightly lower bias as he awaits damage assessments from last week’s flooding in east-central production areas of the country.
State-level winter wheat condition ratings signaled more general improvement in the HRW crop over the past month, despite a minor downtick in top producer Kansas. The “good” to “excellent” ratings for HRW wheat rose 12 points in Colorado (to 68%), six points in Nebraska (66%), five points in Texas (51%) and three points in Montana (48%) during March. The “good” to “excellent” ratings for HRW wheat declined four points in Kansas (53%) and two points in South Dakota (56%) over the past month. Conditions were unchanged in Oklahoma with 70% of the crop rated “good” to “excellent.” On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved another 1.5 points from the end of February to 351.7 and stood 28.4 points above USDA’s final national rating at the end of November. Click here for details. USDA will issue its initial national winter wheat crop conditions ratings of the spring on Monday, April 1.
Environmental organizations and refining groups are challenging EPA’s renewable fuel standards (RFS) for 2023 to 2025, claiming the agency’s analysis is flawed. The Center for Biological Diversity and National Wildlife Federation argued EPA’s decision to maintain biofuels volumes exacerbates climate, environmental and justice harms instead of mitigating them, contrary to the goals of the Clean Air Act. The environmental groups assert that biofuels harm habitats, air and water quality, and impose increased costs on consumers without demonstrating significant climate change mitigation benefits. They argue EPA’s analysis only assessed modest changes, overlooking broader environmental impacts. Multiple challenges have been consolidated, including objections from refiners who claim EPA unlawfully imposed high biofuel mandates, leading to increased costs without boosting renewable fuel production. Refiners also accuse EPA of setting unreasonably burdensome requirements for renewable fuel made from food waste, without adequate explanation or consideration of alternatives. Various legal representatives are involved in the challenges, including the Center for Biological Diversity, Earthjustice and other law firms representing different petitioners.
CORN: May corn futures traded in a narrow range overnight. Bulls are seeking to overcome resistance at $4.41 1/2 then last week’s high of $4.45 3/4. Further selling finds support at $4.37 1/4, the 20-day moving average, with additional backing from $4.34 1/2, then $4.31 3/4.
SOYBEANS: May soybean futures gave up a portion of Monday’s gains overnight. Resistance stands at $12.10, which is quickly backed by $12.12, then $12.17. Meanwhile, support comes in at $11.96 1/2, the 40-day moving average, then $11.88 1/4.
WHEAT: May SRW futures posted modest losses overnight. Initial resistance stands at $5.56 1/4, which is firmly backed by the 40-day moving average at $5.64 1/2, which limited gains on Monday. Support stands at the psychological $5.50 mark, with backing from $5.45 3/4, then $5.37.
CATTLE: Choppy/lower.
HOGS: Choppy/lower
HOGS: Lean hog futures are expected to open with a mostly weaker tone, though resurgent cash market strength could limit losses after the open. April lean hog futures continue to trend lower on the daily bar chart, putting in a series of lower highs and lower lows. The CME lean hog index confirmed traders’ suspicions of a pause in the seasonal rally, as the index is down 12 cents to $83.48 today (as of March 22), which is only the seventh daily decline since the seasonal rally started at the beginning of the year. April futures held a $1.67 premium to today’s cash quote, as of yesterday’s close. It is worth noting that April futures closed higher for the first time in a week yesterday, indicating that the downside in futures may be overdone, which could limit further losses. Demand for pork remained robust in January, which was clear in USDA’s Cold Storage Report. The report showed pork stocks down 6.8 million lbs. in February to 456.5 million lbs., contrary to the five-year average, which was a 29.7-million-lbs. increase for the month. Wholesale pork prices surged to the highest mark since Oct. 2023, as cutout rose $2.36 to $95.74, led by big gains in bellies.
