GRAIN CALLS
Corn: 4 to 8 cents lower.
Soybeans: 6 to 10 cents lower.
Wheat: 6 to 12 cents lower.
GENERAL COMMENTS: Selling pressure built through the overnight session in the grain and soy markets, with futures ending near their session lows. Front-month crude oil futures are around $3.75 lower this morning, which is more than offsetting heavy pressure on the U.S. dollar index. We expect grain and soy futures to be on the defensive this morning amid risk aversion tied to anxiety over the U.S. banking situation.
Macroeconomics moved to the forefront for markets amid fallout from Friday’s collapse of Silicon Valley Bank. There is heightened concern about a financial collapse, though U.S. officials says this situation is far different than 2008-09.
Negotiations began today between UN officials and Russian Deputy Foreign Minister Sergei Vershinin on a possible extension of the Black Sea grain deal, which is up for renewal on March 18. Moscow has repeatedly signaled it will only agree to an extension if restrictions affecting its own exports are lifted. But Turkish Defense Minister Hulusi Akar said on Sunday he believes the deal will be extended. Markets also signal they expect an extension.
Argentina is expected to receive rains in the drier areas later this week and again next week. But World Weather Inc. says any improvement in topsoil moisture will come slowly and mostly too late for a dramatic change to production potential. Brazil’s greatest rain will shift to center-west crop areas in the coming 10 days, although some showers will continue with less frequency and intensity.
Brazil’s soybean harvest reached 53% completed as of last Thursday, according to AgRural, behind 64% on that date last year. The firm reported initial harvest results in Rio Grande do Sul indicated yields were as much as 60% below initial expectations when the growing season started.
Brazil’s safrinha corn planting reached 81% done as of last Thursday, according to AgRural, behind 94% on that date last year. Safrinha corn planting is nearly completed in Mato Grosso, but AgRural says there are still “significant delays” in some areas, especially in Mato Grosso do Sul.
CORN: May corn futures tried to work higher early in the overnight session but buyer interest dried up at the 5-day moving average and the contract turned lower. Near-term support is at last week’s low of $6.06 3/4, followed by the psychological $6.00 mark. Near-term resistance is layered from the 5-day moving average around $6.20 to the 10-day average near $6.27 1/2.
SOYBEANS: May soybean futures failed to find sustained buying overnight above last Friday’s high and weakened. Last Friday’s low at $14.98 is near-term support. The overnight high at $15.16 1/2 is near-term resistance.
WHEAT: May SRW wheat futures traded higher initially overnight but weakened as buyer interest faded above last Friday’s high. Near-term support is last Friday’s low at $6.61. Near-term resistance is layered from the 5-day moving average near $6.80 1/2 to the overnight high at $6.85 1/4.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Higher.
CATTLE: Live cattle futures are expected to open with a mixed tone this morning. Traders will have to wait until later this morning to get USDA’s average cash cattle price for last week, though most of the reported activity Friday afternoon was around steady prices compared to the previous week. Last week’s cash trade wasn’t as strong as traders hoped. April live cattle futures finished Friday at $164.275, which was down from the previous week’s average cash price, signaling traders maintained their overly cautious tone. Given tightening market-ready supplies, futures be trading premium to cash. But we expect buyer interest to be light until cash trade develops, which won’t happen until late this week – possibly not until after USDA’s Cattle on Feed Report Friday afternoon.
HOGS: Lean hog futures are expected to open higher after finishing with strong gains and high-range on Friday. But it wouldn’t surprise us to see selling pressure develop. While the cash index continues its seasonal climb, the slow pace of gains is limiting traders’ willingness to build too much premium into nearby futures. April lean hog futures finished last week nearly $8 above today’s cash index quote. The pork cutout value dropped 59 cents on Friday and movement slowed to 255.5 loads.