Ahead of the Open | April 17, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 1 cent lower to 1 cent higher.
Wheat: SRW 2 to 4 cents higher; HRW steady to 2 cents higher; HRS 1 to 3 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each traded in relatively tight ranges overnight, as corn and wheat mildly favored the upside and soybeans posted modest losses. Outside markets were quiet overnight, as front-month crude oil futures continue to pull back from recent highs, while the U.S. dollar index is consolidating near unchanged, though still on 5.5-month highs. The dollar index has been supported by sinking bonds and higher long-term interest rates.
At USDA’s spring data users meeting on Tuesday, the decision to withhold county estimates for the 2024 growing season and discontinue the July Cattle Inventory Report was a major topic. NASS officials explained these choices were driven by budget constraints rather than shifting funds to other projects. Despite a reduced budget for fiscal year (FY) 2024 compared to FY 2023, officials stated they were open to resuming these efforts if funding becomes available. They also noted USDA's Risk Management Agency (RMA) provides county data, serving as a potential alternative. Additionally, a representative from USDA’s Foreign Agricultural Service discussed plans to overhaul the export sales reporting system, aiming for a 2025 rollout after addressing issues from a failed update in 2022.
House Ag Chair Glenn “GT” Thompson (R-Pa.) said this regarding a new farm bill: “A lot of this bill, quite frankly, has been written. We’ve found some pretty creative ways to be able to fund what I think would be a transformational and highly effective farm bill.” He threw in this kicker: “Anyone who criticizes our funding framework is either being ignorant of the details or being disingenuous.” Comment: Congress has a long history of some lawmaker or staff self-describing their own legislation, which sometimes falls flat of early assessments, especially from its authors. As for the “pretty creative” funding mechanisms, why not release them so a fair and accurate assessment can be made?
Fed Chair Jerome Powell’s recent statements indicate a cautious approach towards adjusting interest rates due to persistent inflationary pressures. Powell suggested the Fed may delay rate cuts, acknowledging that recent data has not increased their confidence in achieving their inflation targets promptly. He emphasized the importance of allowing current policy measures to continue working and relying on evolving economic data to guide future decisions. While Powell indicated rate increases were not under consideration, he also stated the Fed would keep rates at their current level for as long as necessary if inflation remains stubborn. This stance represents a shift from earlier indications that suggested the Fed was nearing a point where rate cuts could be considered.
CORN: May corn futures traded in a tight range overnight. Initial resistance stands at $4.33 1/2 and is quickly backed by the 40-day moving average at $4.36 3/4, which has capped most gains since its initial test in mid-March. Support comes in at $4.28 1/2, $4.27 then $4.26 1/2 on renewed selling pressure.
SOYBEANS: May soybean futures continued lower overnight as prices continue to struggle garnering any bullish momentum. Resistance stands at $11.51 with backing from $11.58 1/4, then the 10-day moving average at $11.63 1/4. Support comes in at $11.40 3/4, which capped most of the downside in February, then $11.28 1/2.
WHEAT: May SRW futures posted modest corrective gains overnight. Bulls are seeking to overcome resistance at $5.53 3/4, which capped most gains overnight. Additional resistance stands at the 40-day moving average, currently at $5.60 1/4. Support comes in at the psychological $5.50 mark then yesterday’s low of $5.42 1/2.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, though technical resistance stemming from the early-April consolidation zone could limit gains after the open. Cattle futures have seen two days of impressive corrective buying, closing on session highs yesterday afternoon at the highest mark in nearly two weeks. As expected, cash cattle trade has had a slow start to the week, with no trades reported thus far. Choice cutout fell back below the psychological $300.00 mark, which has acted as a pivot point, hovering within a couple dollars of that mark for the past two weeks. Choice cutout dropped $2.86 to $298.02 while Select rose $1.30 to $292.64, while movement was lighter at 111 loads.
HOGS: Lean hog futures are expected to open with a mostly weaker tone, driven lower by technical selling which closed prices well off yesterday’s highs. Despite the ongoing seasonal rally in both cash hogs and wholesale pork, sellers have been featured in lean hog futures, driving prices sharply lower last week and taking advantage of yesterday’s gains, closing prices well off Tuesday’s intraday highs. Still, strength in the cash market could limit losses after the open, especially considering the modest premiums seen in May futures over the index. The CME lean hog index rose another 25 cents to $90.98, extending the seasonal rally. Wholesale pork prices fell $4.05 to $99.55 Tuesday, driven lower almost entirely by plunging primal bellies, which sunk $22.78.
