GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 4 to 8 cents lower.
Wheat: SRW steady to 2 cents higher; HRW 2 to 5 cents lower; HRS 1 to 3 cents higher.
GENERAL COMMENTS: Corn, soybeans and HRW wheat failed to sustain corrective buying overnight and faded to losses. SRW and HRS wheat posted modest corrective gains overnight. Crude oil futures are around 60 cents lower this morning, while the U.S. dollar is more than 200 points higher. Without outside markets negative for grain/soy futures, there isn’t a compelling reason for traders to halt the recent selling.
USDA cut its winter wheat crop rating to 26% “good” to “excellent,” down one point from the previous week. The portion of crop rated “poor” to “very poor” increased two points to 41%. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop dropped another 3.4 points to a historically low 244.6. The HRW CCI rating declined in Kansas, Oklahoma, Texas and Nebraska, while the other states showed modest improvement. The SRW crop slipped 5.0 points to 376.4, though that was still above average.
Rain will develop in HRW wheat areas today and continue periodically through Friday. World Weather Inc. says relief from long-term drought is expected. Follow up rain is expected in the U.S. Central and Southern Plains during May.
Temperatures in the Plains and Corn Belt will be below normal over the coming week with eastern parts of the country still cooler biased next week, which may slow planting efforts. USDA reported planting at 14% completed for corn (11% five-year average) and 9% done soybeans (4% average) as of Sunday.
A proposal by United Nations Secretary-General Antonio Guterres on improving and extending the Black Sea grain deal can only succeed if there is international pressure on Russia, a senior Ukrainian official said. Meanwhile, Russia says circumstances are not in factor of extending the deal, saying its conditions have not been properly implemented. Russia also contends Ukraine is trying to attack its ships in the Black Sea, which threatens the prospects for an extension.
Turkey will impose a 130% tariff on imports of some grains, including wheat and corn, starting May 1.
Crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate another 1 MMT to 23 MMT, citing “very disappointing” yields. He left his Argentine corn crop estimate at 36 MMT, noting that while the growing season has been difficult, corn fared better than soybeans. Cordonnier kept his Brazilian soybean and corn crop estimates at 153 MMT and 123 MMT, respectively.
A union of Argentine transporters ended a strike Monday evening that could have posed a threat to the country’s grain shipments. The strike lasted less than a full day and therefore won’t impact Argentine grain/soy exports.
CORN: May corn futures failed to find sustained corrective buying overnight and turned lower. The 50-day moving average and Monday’s low converge to provide initial support in the $6.48 1/2 to $6.48 1/4 range. Below that, bears would target the 40-day average at $6.44 1/4 and this month’s low at $6.40 1/4. Near-term resistance is in the $6.50 to $6.57 1/4 range.
SOYBEANS: May soybean futures closed poorly on Monday and failed to sustain corrective buying overnight, falling below the 200-day moving average. Next support is in the $14.50 to $14.40 area. Near-term resistance is layered from the 200-day average around $14.61 to $14.72.
WHEAT: May HRW wheat futures are trading well below the short-, intermediate and long-term moving averages, signaling momentum is clearly bearish. Initial support is at last week’s low of $8.26 1/2. Below that, bears would target the $8.15 to $8.00 range. Near-term resistance is heavily layered, starting at $8.39 1/2.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after a high-range close on Monday. On the surface, Monday’s mixed close doesn’t appear overly bullish, but bulls fended off strong early seller interest and posted a strong close. If bulls are able to build on Monday’s modest gains it would strengthen odds of higher cash cattle prices after last week’s drop from the all-time high. Wholesale beef prices firmed 52 cents for Choice and 90 cents for Select on Monday, though movement was light at 70 loads. It appears rather noticeable that packers are using wholesale beef prices to support their margins, while retailers are balking at the high prices.
This afternoon’s Cold Storage Report will detail frozen meat stocks at the end of March. The five-year average is a 7-million-lb. decline in beef stocks for the month.
HOGS: Lean hog futures are expected to open with a mixed tone this morning. Futures posted strong corrective gains on Monday, which would typically lead to followthrough buying. But with the cash market remaining under pressure, two-sided trade is more likely. The CME lean hog index is down another 13 cents to $71.18. After Monday’s gains, May futures finished $6.52 above today’s cash quote (as of April 21), while the June contract held a $16.17 premium. Additional corrective buying in futures is likely limited until the cash index strengthens. The pork cutout value fell $1.75 on Monday and movement totaled only 268.2 loads. Despite pork being cheap compared to beef, packers are having to lower prices to keep product moving through the pipeline.
This afternoon’s Cold Storage Report will give traders a better idea of how supply and demand are lining up. The five-year average is a 12.9-million-lb. drop in pork stocks during March.