Ahead of the Open | April 18, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 8 to 10 cents lower.
Wheat: SRW 1 to 3 cents lower; HRW steady to 2 cents higher; HRS 5 to 7 cents higher.
GENERAL COMMENTS: Corn and soybeans saw sustained selling pressure most of the night. Wheat favored the upside for the most part, though prices turned sharply lower following this morning’s export sales report. Outside markets were relatively quiet overnight, despite volatile trading yesterday. Front-month crude oil futures are posting corrective gains following Wednesday’s selloff, while the U.S. dollar index is trading near unchanged.
USDA’s attaché in Argentina cut the country’s corn production forecast to 51 MMT from 57 MMT projected in January due to a 4% reduction in harvested acreage and impacts from corn stunt disease. The post noted, “This is an evolving disease, and its final damage will be known once the last fields are harvested in late June. Farmers will wait until combines begin to give real yield data and calculate if the produce will more than offset the cost of the harvesting. If not, many low-yielding fields could remain unharvested. Currently, most contacts are estimating production of 50 MMT to 52 MMT, but there is a downside as corn conditions get worse day by day. Several contacts are already estimating a potential crop of below 50 MMT.” For 2024-25, the attaché projects Argentina’s corn production at 48 MMT for corn, as producers switch to soybeans due to this year’s disease issue.
Paraguay will produce a record soybean crop but exporters are worried about low river levels that are slowing shipments along the key Paraguay-Paraná waterway, with a drought in central-west Brazil affecting water levels running downstream. “Low rivers mean the barges can’t carry as much, and that slows down the entire process,” Sonia Tomassone, foreign trade adviser at the Paraguayan Chamber of Oilseed and Cereal Exporters (CAPECO), told Reuters. The level of the Paraguay River near the key grains port of Villeta is 0.74 meters, government data show, well down from over 5 meters at the same date a year ago. Meteorologists have warned that despite some recent rains, dry conditions in the Pantanal wetlands of western Brazil could continue to affect regional river sources. “The situation is going to improve at the mouth of the Paraguay River, but (the rains) aren’t lasting,” said Eduardo Mingo, director of meteorology and hydrology at Paraguay’s National Meteorological Center.
Export sales for the week ended April 11:
Corn: Net sales of 501,200 MT for 2023-24, up 54% from the previous week but down 45% from the four-week average. Increases came primarily for Colombia, Mexico and China. Traders expected sales between 300,000 and 900,000 MT for 2023-24.
Soybeans: Net sales of 485,800 MT for 2023-24, up 59% from the previous week and 62% from the four-week average. Mexico led purchases for the second consecutive week. Traders expected sales from 300,000 to 650,000 MT for 2023-24.
Wheat: Net sales reductions of 93,600 MT for 2023-24, down noticeably from the previous week and the four-week average. China and unknown destinations led reductions. Net sales of 222,000 MT for 2024-25. Traders expected (100,000) to 200,000 MT for 2023-24 and 150,000 to 400,000 MT for 2024-25.
USDA reported daily export sales of 138,000 MT of soybean cake and meal for delivery to the Philippines during the 2023-24 marketing year.
CORN: May corn futures continue to face selling pressure. Resistance stands at $4.31 3/4 with backing from the 40-day moving average at $4.36 1/4. Further selling finds support at $4.28 1/2, the April 2 close of $4.26 1/2, then $4.24 1/2.
SOYBEANS: May soybean futures gave up Wednesday’s gains overnight. Initial resistance stands at $11.51, which is backed by the 10-day moving average at $11.60. Bulls are seeking to hold support at the $11.40 mark, which is reinforced by the Feb. 29 spike low of $11.28 1/2.
WHEAT: May SRW futures saw sharp selling pressure into the break. Bulls are seeking to overcome initial resistance at $5.42 1/2 before eyeing firmer resistance at $5.49 1/2, which is quickly reinforced by the psychological $5.50 mark. Further selling finds support at $5.34 then $5.28 1/2.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone, in a continuation of Wednesday’s modest selling pressure. Cash cattle trade has been nonexistent so far this week, providing no direction to the futures market. Failure to stabilize wholesale beef prices is not likely to give packers incentive to raise their bids ahead of Friday. Cash cattle trade is not usually active before Fridays on report weeks, though this week’s particularly slow start shows very little trade could take place before the Cattle on Feed Report Friday afternoon. Wholesale beef values continued lower on Wednesday, as Choice beef fell $1.21 to $296.81 and Select dropped $1.76 to $290.88. USDA reported net beef sales of 17,700 MT for 2024, up 30% from the previous week and 27% from the four-week average. Exports of 16,700 MT were a marketing-year high.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though gains could be limited after the open by continued technical selling pressure. The rally in futures has stagnated the past week and a half despite ongoing seasonal gains in the cash market. The CME lean hog index is up another 38 cents to $91.36 as of April 16. The index is up $26.31 on the seasonal rally since the beginning of the year and is nearly $20.00 above last year at this time. Pork cutout was unchanged on Wednesday at $99.55, though movement was fairly light for midweek at 236.5 loads. Cutout has rallied $14.79 since the beginning of the year and is nearly $22.00 above last year at this time. USDA reported net pork sales of 21,800 MT for 2024, a marketing-year low—down 54% from the previous week and 47% from the four-week average.
