Ahead of the Open | April 2, 2024
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 1 to 3 cents higher.
Wheat: Winter wheat 2 to 4 cents lower; HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each traded in tight ranges during low volume trade overnight. Soybeans favored the upside and wheat favored the downside modestly into the break. Front-month crude oil futures continue to extend to the upside, trading at five-month highs on the continuation chart. The U.S. dollar index posted modest losses from six-week highs overnight.
South American crop consultant Dr. Michael Cordonnier left his Brazilian crop production forecasts at 145 MMT for soybeans and 112 MMT for corn. Cordonnier also left his Argentine crop estimates at 51 MMT for soybeans and 55 MMT for corn. His bias improved to neutral for both crops in Brazil and the Argentine soybean crop, while it’s neutral to slightly lower for Argentina’s corn crop.
Chinese customs have asked some traders to limit deliveries of foreign corn into bonded areas, in a move aimed at easing domestic oversupply and supporting prices for farmers before the planting season, Bloomberg reported. The country has an official corn import quota of 7.2 MMT, which benefits from a tariff of just 1%. Above that, cargoes are subject to duties of 65%. However, corn brought into bonded areas can be blended with other ingredients and processed into animal feed, which is then imported at a lower duty. Local officials are asking traders and processors to keep arrivals below year-ago levels, sources told Bloomberg. Authorities stepped up checks on cargoes and tightened requirements for processors, according to one of the sources. Limiting deliveries of foreign corn would likely put pressure on global prices and could lead to washouts of some cargoes, the sources noted.
India has asked global and domestic trade houses to avoid buying new-crop wheat from local farmers to help the government-backed Food Corporation of India (FCI) procure large quantities to shore up its depleting reserves, sources told Reuters. The government informally asked private traders to avoid buying wheat at least in April, the sources said, its first such guidance since 2007. Wheat procurement starts tapering off after mid-May. The Indian government has sold record quantities of wheat from state stockpiles to boost local supplies and tame prices, leading to a drawdown in reserves essential for the world’s biggest food welfare program. Despite falling inventories, New Delhi has resisted calls for wheat imports as overseas purchases tend to anger farmers who will be an influential voting segment in the April 19 elections.
CORN: May corn futures traded in a tight range overnight. Price action on Monday was largely bookended by 40-day moving average resistance at $4.40 and 20-day moving average support at $4.36. Those will remain key levels today. Further buying finds resistance at $4.48, while extended selling finds support at $4.32, then $4.30.
SOYBEANS: May soybean futures posted modest corrective buying overnight. Resistance stands at the 20-day moving average at $11.89 1/2. Further buying finds resistance at $11.95 1/2 then the psychological $12.00 mark. Support comes in at $11.85 3/4, $11.77 then $11.65 3/4.
WHEAT: May SRW futures traded in a tight range overnight. Prices closed well off session lows on Monday. Bulls are seeking to overcome resistance at $5.63 3/4, the 40-day moving average. Additional resistance lies at $5.68 1/2, then $5.84 1/4. Meanwhile, support stands at the converged 10-day and 20-day moving averages near $5.52 1/2, which capped losses overnight. Further selling eyes support at $5.48 3/4.
CATTLE: Lower.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open lower on a continuation of Monday’s late-session plunge. USDA has confirmed additional highly pathogenic avian influenza (HPAI) cases in dairy cattle, with herds affected now in four states and results still awaited on a presumptive positive test in another. News of a human case of HPAI in a Texas person who had contact with infected cattle sent cattle futures sharply lower on Monday, with selling pressure leading to a bearish reversal. Key today will be if active buyers come in under the market, as last week’s cash average of $188.23 is now well above nearby futures, which go into delivery next Friday. How quickly cash trade follows to the downside remains to be seen, as cash prices rebounded late last week despite weak futures price action. Wholesale beef prices declined on Monday, as Choice cutout dropped 98 cents to $305.74 and Select dipped $1.64 to $301.79 and movement was light at 77 loads.
HOGS: Lean hog futures are expected to open higher on a continuation of Monday’s strength. After gapping lower, June lean hogs surged to a fresh contract high on Monday. The CME lean hog index is up another 18 cents to $84.78 as of March 29, marking a new high during the seasonal rally. April futures have maintained a modest premium to the index ahead of the contract’s expiration on April 12. Wholesale pork prices surged $2.95 higher to $96.61 on Monday, marking a fresh high for the seasonal advance and the highest mark since September of last year. Gains were led by a $11.85 rebound in bellies, though that was down from a $31.71 jump at midsession. Movement was light at 219.01 loads.
