The CME and Total Farm Marketing offices will be closed Friday, April 7, 2023, in observance of Good Friday

MARKET SUMMARY 04-06-2023

Soybean exports, not sales, are the focus of the traders in the soybean market. The U.S. has picked up some additional late sales to add to the sale book for the marketing year, but the main export sales window is basically closed. Shipments are the main focus as the market is watched to see if those soybean sales on the books can turn into delivered beans. Last week, shipments were 20.5 million bushels, bringing the total shipments for the year to 1.656 billion bushels. This was 2% above last year in this window. Last month, the USDA raised export projections for the marketing year to 2.015 billion bushels. Next week brings the April Supply and Demand report for grains and the market is wondering if the USDA will need to make further demand adjustments again for the marketing year.

Like what you’re reading?

Sign up for our free daily TFM Market Updates and stay in the know!

CORN HIGHLIGHTS: 

• May corn futures closed lower for the fourth day in a row giving up 9-1/4 cents to close at 6.43-1/2. For the week, May lost 17 cents, posting a weekly hook reversal. Dec futures gave up 4-0 cents for the day and lost 9-3/4 for the week closing 5.56-3/4. Markets are closed tomorrow in observance of Good Friday.
• Export sales for last week were 49.1 million bushels. A solid figure but below the four-week average. Year-to-date sales are at 1.465 billion bushels, as compared to a year ago at this same time at 2.061. The forecasted USDA total for the 2022/2023 marketing year is 1.850 which means export sales to date are 79.2% of projections. The next estimate from the USDA will be Tuesday’s WASDE report.
• Planting progress will pick up into next week for parts of the Midwest while other areas, namely the northwestern quadrant of the corn belt, will see minimal to no field work due to wet conditions.
• Argentina’s corn crop was downgraded 2% and is now only rated 7% good-to-excellent according to the Buenos Aires Grain Exchange.
• The inverse price relationship May to July (23-3/4 cents premium to May) suggests export competition from Brazil when the safrinha crop (second crop) will be making its way to market.
• The U.S. energy department said supplies of gasoline and ULSD (ultra-light sulfur diesel) are the lowest in 9 years for this date, implying demand for ethanol should remain firm.
• The USDA will release the WASDE next Tuesday. The focus will be on potential changes in South America. Private estates are leaning toward a small increase in the Brazilian crop which will make up for shortfalls in Argentina.

SOYBEAN HIGHLIGHTS:

• Soybeans closed below 15 dollars in May after being pulled lower by a drop in soybean oil, as well as light export sales.
• The USDA reported an increase of just 5.7 mb of soybean export sales for 22/23 and net cancellations of 1.8 mb for the 23/24 marketing year.
• Argentina’s soy dollar program has put pressure on prices with farmers now being incentivized to sell cash beans to get a favorable exchange rate of 300 pesos per dollar versus the usual 210 pesos.
• In Argentina, the soybean crop is rated just 4% good to excellent with 41% matured, while Brazil is 80% harvested and expecting production of 153 mmt or more.
• Brazil’s president will be visiting China next week, most likely in an effort to ramp up their soybean sales.

WHEAT HIGHLIGHTS:

• May Chi lost 6-1/2 cents, closing at 6.75-1/2 and July down 6-3/4 at 6.88.
• May KC gained 3 cents, closing 8.64-1/2 and July up 3 at 8.46.
• Chicago wheat traded both sides of neutral today but closed in the red, though Kansas City was able to eke out a positive close with support from the forecast in the southern plains looking to remain hot and dry for the next 10 days.
• The USDA reported an increase of 7.1 mb of wheat export sales for 22/23 and a net cancellation of 0.4 mb for 23/24.
• The foreign minister of Turkey has said that the Ukraine war could intensify this summer and that raises questions about what Ukraine’s crop will be, how much they can export, and what will happen to the Black Sea corridor deal.
• As many as 5 cargoes of Polish wheat were said to be imported into Florida for milling.
• Russia is reported to have made a sale of 600,000 mt of wheat to Egypt.
• As a reminder, markets are closed tomorrow in observance of Good Friday, and the next WASDE report will be on Tuesday.

CATTLE HIGHLIGHTS: 

• Cattle markets saw strong buying support in both live cattle and feeder cattle as prices used strong cash trade to push triple-digits higher and closing at new contract highs in live cattle. Apr live cattle gained 2.675 to 171.075 and Jun jumped 2.800 to 163.100. Feeders followed suit with live cattle, as Apr gained 2.800 to 200.625
• Cash cattle trade began to develop on Thursday with strong bids. Southern trade was $170-$172, up $3-4 higher than last week, and Northern trade was in the $175-177 range, $5.00 higher than last week. Northern dress trade was $278-280, again higher than last week’s totals.
• The strong cash trade caused live cattle prices to gap higher and trade to new contract highs. Prices closed near the top of the range, leaving the market open for additional strength next week.
• Retail values have surged higher this week as Choice carcasses at midday are $9.00 higher than Friday’s afternoon close. Today, Choice carcasses gained 1.14 to 289.76 but Select was 0.77 lower to 277.39 at midday. The load count was light at 39 loads.
• Feeders followed live cattle higher. The Feeder Cash Index was 0.07 lower to 193.22.  Countryside cash markets remain strong, supporting the lower prices feeders.

LEAN HOG HIGHLIGHTS: 

• Lean hog futures saw mixed trade as the Apr contract was supported by the discount to cash, but weak fundamentals pressured deferred futures outweighing a market year high of export sales for pork last week. Apr hogs gained 0.750 to 74.150 but Jun futures traded 0.200 lower to 88.175.  Jun futures posted new intraday contract lows during the session.
• The cash market stays disappointing. Midday saw direct trade was 0.74 lower to 70.51. The Lean Hog Cash Index lost another 0.77 to 73.91. The index is trading at a discount to the Jun futures of nearly $14.00, which keeps the deferred contracts limited.
• Estimated slaughter on Wednesday was 477,000 head, slightly above last week, but 25,000 head larger than last year. Slaughter runs have stayed heavy, and the large supply picture keeps the cash market limited and weighs on the futures prices.
• Hog retail values were firmer at midday as carcasses were 1.71 higher to 78.27. The load count was light at 139 loads. Hog retail values are trading at their lowest price levels since December 2022.
• Net pork export sales for last week were 53,200 MT for 2023, a marketing-year high. This was up 75% from the previous week and 69% from the prior 4-week average. China and Mexico were the top buyers of U.S. pork last week.

DAIRY HIGHLIGHTS: 

• With May futures now taking over on the second month continuous charts, Class III is testing the lows from late February while Class IV is at a 1-1/2 year low.
• Nearby Class IV futures are not far off from entering their 6+ year long range that lasted from late 2014 through early 2021.
• May Class III futures closed out the shortened week with losses of 62 cents on top of last week’s 65 cent drop.
• The block/barrel average was down more than a nickel this week to push back under $1.80/lb, and spot whey was crushed 8.25 cents to break back under $0.40/lb.
• Powder hit its lowest point since February 2021 with a break to $1.1250/lb; spot butter is within its recent range, but testing the downside.

Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.

Author

Amanda Brill