GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 10 to 13 cents lower.
Wheat: Winter wheat 4 to 6 cents lower; HRS 2 to 4 cents lower.
GENERAL COMMENTS: Corn futures showed relative strength overnight though saw increased selling into the break, while soybeans and wheat each traded lower most of the overnight session. Outside markets are mixed this morning, as front-month crude oil futures are seeing renewed selling strength and the U.S. dollar index is trading near unchanged.
Brazilian crop estimating agency Conab raised its Brazilian soybean crop estimate 1.2 MMT to 147.7 MMT, despite flooding in Rio Grande do Sul. It will further assess production losses in the state. Conab raised soybean planted area but cut the national average yield. Conab increased its Brazilian corn production forecast 672,000 MT to 111.6 MMT, with 538,000 MT of the rise in the safrinha crop, driven by a higher planted acreage estimate.
The Bureau of Labor Statistics released Producer Price Inflation (PPI) numbers this morning, which came in hotter than expected. Following a revised -0.1% drop in March, PPI rose 0.5% month-over-month in April, above forecasts of 0.3%. That marked an annual inflation total of 2.2%, the same as an upwardly revised total in March. Core PPI rose 0.5%, well above expectations of 0.2%, marking a yearly core inflation mark at 2.4%, up from 2.1% in March. Producer inflation coming in higher than expected feeds into the narrative that interest rates will need to stay higher for longer and risks increases to consumer inflation down the road.
USDA rated the winter wheat crop 50% “good” to “excellent,” unchanged from the previous week, though there was a one-point increase in the top category. The “poor” to “very poor” rating increased two points to 18%. On the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 1.1 points to 318.6, despite a 1.6-point decline in top producer Kansas. The SRW crop rose 3.6 points to 386.3, led by a 1.7-point increase in top producer Illinois. Click here for details.
South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate 1 MMT to 50 MMT due to disappointing yields in far northern and far southern production areas and the potential for frost impacts on some later developing soybeans. After the recent string of cuts to the Argentine corn crop due to losses from corn stunt disease, Cordonnier left his estimate at 47 MMT. He has a neutral to lower bias toward both crops in Argentina. For Brazil, Cordonnier left his estimates at 147 MMT for soybeans and 112 MMT for corn.
The National Oilseed Processors Association (NOPA) is advocating for higher tariffs on Chinese used cooking oil (UCO), which it claims undermines U.S. crops used for biofuels. NOPA seeks to raise the current 15.5% levy to match tariffs on other clean energy sources. This push comes amid speculation that imported UCO from China may be mixed with fresh vegetable oils, potentially distorting commodity values.
USDA reported daily export sales of 405,000 MT of corn for delivery to Mexico. Of the total, 135,000 MT is slated for deliver during the 2023-24 marketing year, while the remaining 270,000 will be delivered during the 2024-25 marketing year.
CORN: July corn futures saw relative strength overnight. Bulls are seeking to overcome initial resistance at $4.75 1/2 before tackling resistance at $4.81 1/2. Support comes in at $4.69 and is backed by the 10-day moving average at $4.64.
SOYBEANS: July soybean futures saw renewed selling strength overnight. Initial resistance stands at the 10-day moving average at $12.12, which failed as support overnight. Further buying eyes resistance at $12.22. Support comes in at $12.04 1/2, which is quickly reinforced by the $12.00 mark, then $11.91 3/4.
WHEAT: July SRW futures saw profit-taking overnight. Initial resistance stands at yesterday’s close of $6.87 and is backed by the overnight high of $6.96. Further buying targets the psychological $7.00 mark. Support comes in at $6.63 1/2 then $6.53 3/4, the May 7 high.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone on strength in cash and wholesale prices. Last week, the cash cattle average rose 20 cents to $185.94, the third consecutive weekly gain. Wholesale beef prices surged higher on Monday, with Choice cutout jumping $4.38 to $298.95 and Select firming $3.01 to $287.18. Packers moved a solid 113 loads at sharply higher prices, the first sign of a potential short-term low in the wholesale beef market, though additional strength is needed for confirmation. As cash fundamentals have improved, failure to follow through to the upside in futures would be a bearish omen indicative of further selling pressure.
HOGS: Lean hog futures are expected to open mostly firmer tone, continuing the recent trend of alternating strength and weakness. Futures have generally shown strength in the morning and weakness in the afternoon over the past week, bucking that trend would be a bullish sign that selling pressure could mitigate. Relative weakness in the CME lean hog index continues to weigh on futures, as the index is down 10 cents to $91.22 as of May 10. Meanwhile, strength in the wholesale pork market could lend support, as cutout rose $2.67 to $102.44 Monday, driven higher by a $8.72 jump in bellies though all cuts but picnics posted gains on the day.