Ahead of the Open | April 3, 2024
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents higher.
Wheat: SRW 3 to 5 cents higher; HRW 7 to 9 cents higher; HRS 5 to 7 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each posted corrective gains overnight, though corn and soybeans both saw renewed selling pressure into the break. The marketplace is hyper concerned with the inflation/interest rate outlook as recent economic data has shown impressive strength. Powells speech midday will be closely listened to. Outside markets were supportive overnight, as front-month crude oil futures continue to extend higher and the U.S. dollar index traded modestly lower.
The ag attaché in China projects the country’s corn production will increase 2.4% to 296 MMT this year amid an expected increase in yields and slightly larger planted area. The post projects China’s wheat production will rise 1% to 138 MMT on an expected rise in yields and steady planted area. China’s corn imports are forecast to decline 3 MMT to 20 MMT in 2024-25, while wheat imports are likely to be steady at 10 MMT. The attaché projects China will import 7.5 MMT of sorghum in 2024-25, unchanged from the current marketing year.
Through the first nine months of the 2023-24 marketing year, Ukraine exported 35.4 MMT of grain, down 2.6 MMT (6.8%) from the same period last year. The exports included 19.1 MMT of corn, 14 MMT of wheat and 1.96 MMT of barley. Ukraine’s ag ministry said it has exportable grain supplies of about 50 MMT for 2023-24.
Bond traders priced in less monetary policy easing by the Federal Reserve this year — briefly setting the odds of a first cut in June at below 50% — after a gauge of U.S. manufacturing activity showed expansion for the first time since 2022. Swap contracts for this year priced fewer than 65 basis points of reductions in the Fed rate — well less than the 75 basis points that U.S. policymakers themselves are forecasting — after the ISM manufacturing for March exceeded all estimates in a survey of economists.
CORN: May corn futures saw profit taking overnight. Bulls are seeking to overcome resistance at $4.29, $4.33 then $4.35 1/2 on continued strength. Support comes in at $4.26 1/2, the psychological $4.25 mark, then $4.22.
SOYBEANS: May soybean futures posted modest corrective gains overnight. Bulls are seeking to overcome initial resistance at $11.81 1/2, which is backed by the 20-day moving average at $11.87. Meanwhile, support stands at $11.68 3/4, $11.65 3/4, then $11.55.
WHEAT: May SRW futures posted corrective gains overnight. Prices continue to trade in a choppy uptrend dating back to the March lows. Resistance stands at $5.52 1/4 with backing from the 40-day moving average at $5.62 3/4. Support comes in at $5.44 1/2, the overnight low at $5.40 1/4, then $5.38 1/2.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone, though steep discounts to last week’s cash average could limit losses after the open. After posting sharp gains during a five-week stretch from mid-February, wholesale beef prices have since been on a near-daily retreat from the peak nearly two weeks ago. Choice beef fell another $1.58 to $304.16 and Select sunk $2.80 to $298.99 on Tuesday, pressing packer margins further into the red. Weights continue to rise contra-seasonally, which pressures live cattle prices and wholesale prices alike, as supply of beef is increased. Packers limiting slaughter runs has done little to stop the bleed in wholesale prices. Cash cattle trade is likely to be pushed late into the week, though sources are expecting light trade at lower prices, corresponding with the drop in futures and fresh contracted supplies becoming available to packers.
HOGS: Lean hog futures are expected to open with a mostly weaker tone, as premiums to the lean hog index and technical resistance are likely to limit buyer interest. June lean hog futures continue to trend higher on the daily bar chart, though trendline resistance stemming from the highs seen throughout March stands just above the market. The CME lean hog index is up another 14 cents to $84.92 as of April 1. That puts April futures, which go off the board on April 12, $1.63 above the most recent index quote, implying gains of just over 16 cents per day in the index. Price action in the index has been erratic, with daily changes ranging from a drop of 12 cents to a gain of 56 cents in the last week alone. Wholesale beef prices surged to a fresh for-the-move high on Tuesday, with cutout rising 52 cents to $97.13, led by strength in ribs.
