MARKET SUMMARY 4-10-2023

The corn export movement remains a major focus for traders. Weekly export inspections for last week were reported today at 805,000 mt, within expectations. Those numbers on the lighter side of the market’s hope as inspections were softer than last week’s numbers. Current inspections are at 20.1 MMT, which is still trending 37% under last year in this time window. In looking at the historical inspections, the peak of U.S. inspections this year is lacking the historical levels of previous years. Tuesday brings the next USDA Supply and Demand report, and demand changes will still be a focus of the market. Recently, corn grain stock came in lower than expectations, and the April report will provide some direction on how that shortfall will be handled.

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CORN HIGHLIGHTS: 

• May and December corn posted daily reversals. May closed 10-1/2 cents higher at 6.54 and December added 6-0 to end the session at 5.62-3/4. May ended a four-day losing streak.
• USDA WASDE Report is due out at 11:00 central tomorrow, April 11, 2023. Projected carryout for the 2022/2023 season is 1.316 billion bushels. Last month was 1.377 bb. The reduction is expected due to a lower quarterly stocks figure on March 31, 2023.
• Argentina’s corn crop is expected to be 37 mmt verses last month’s estimate of 40 mmt and last year’s 49.5. Drought has been an issue for the Argentine Farmer.
• Brazil’s corn crop is expected to be 126.4 mmt verses last month’s 125 mmt and last year’s 116 mmt.
• Planting is likely to be swift in the central/western Midwest as the week progresses. The Northern third will need snow melting, drying, and warmer soils before advances to fieldwork. The latest 6-to-10 outlook suggests above normal precipitation for this region.
• Weekly export inspections at 31.7 mb were slower than hoped for bringing the year-to-date total to 794 mb or 42.9% of the expected total sales of 1.850 bb.
• According to the Daily Livestock Report, Year-to-date beef production is down 4.5%, pork up .8% and turkey down 5%. This could suggest lower feed usage for corn in future USDA reports.

SOYBEAN HIGHLIGHTS:

• Soybeans and bean meal closed lower today while bean oil was relatively unchanged with slight losses in the front month and slight gains in deferred months as crude oil slipped.
• Tomorrow’s WASDE report is not expected to hold many surprises, but many analysts are looking for a decline in ending stocks from 210 mb to 201 mb, the tightest level in 7 years.
• The USDA reported that 24.6 mb of soybeans were inspected for export putting total inspections for 22/23 at 1695 mb, up 2% from the previous year.
• Tomorrow’s report may show an increase in Brazil’s production from 153 mmt, but also may show a decrease in Argentinian production down to 29 mmt.
• Last week’s CFTC data showed funds increasing their net long position by 46,442 contracts to 145,964 contracts.

WHEAT HIGHLIGHTS:

• May Chi gained 3 cents, closing at 6.78-1/2 and July up 2-3/4 at 6.90-3/4.
• May KC gained 11-1/2 cents, closing at 8.76 and July up 12-1/4 at 8.58-1/4.
• Weekly wheat inspections at 12.3 mb bring total 22/23 inspections to 632 mb (the USDA is estimating 775 mb of wheat exports for 22/23).
• Tomorrow, April 11, the market will get the monthly WASDE report.
• The average pre-report estimate for US wheat carryout comes in at 581 mb. This compares with 568 mb in March, and 698 a year ago.
• The average pre-report estimate of world carryout for wheat is 267.1 mmt vs 267.2 in March (and 271.5 last year)
• The seven-day forecast for the southwestern Plains calls for light showers, but it will not be enough to overcome the drought conditions.
• Warming temperatures in the northern Plains this week will cause melting snow, which could lead to flooding issues in some areas.
• May wheat options expire next Friday, April 21. First notice date for May futures is Friday, April 28.

CATTLE HIGHLIGHTS: 

• Cattle markets saw additional buying support in both live cattle and feeder cattle as prices used strong cash trade from last week and good retail strength to push higher and closing at new contract highs in live cattle. Apr live cattle gained 0.300 to 171.375, and Jun added 0.600 to 163.700. Feeders followed suit with live cattle, as Apr gained 0.300 to 200.925.
• Cash cattle trade was undeveloped, typical for Monday. The stronger retail market and tight supplies bring optimism that cash strength will continue again this week.
• The strong money flow has supported the cattle markets. Last week Commitment of Trader’s report saw funds add 21,000 net long live cattle contracts to make them long a net 85,000 contracts, still well below the high of 112,000 contracts at the start of March.
• Retail values surged higher last week as Choice carcasses traded $10.45 higher, helping support the cash market bids. Today, Choice carcasses gained 1.96 to 292.74 and Select was 1.19 higher to 276.97 at midday. The load count was light at 25 loads.
• Cattle slaughter was light last week at 603,000 head, down nearly 50,000 from the previous week, and over 9% from last year. Total beef production was 495 million pounds, down 7.5% from last week. The tight supplies will help support the retail market.
• Feeders followed live cattle higher. The Feeder Cash Index was 0.04 higher to 193.33. Countryside cash markets remain strong, supporting the discounted futures prices for feeders.

LEAN HOG HIGHLIGHTS: 

• Lean hog futures saw mixed trade as the Apr contract stays tied to the cash market and cash index, but deferred contract may have found some strength and value buying. Apr hogs lost 0.775 to 73.375, but Jun futures traded 0.975 higher to 89.150.
• The cash market remains disappointing. At midday direct trade was not reported due to confidentiality, but daily weight prices were firmer to 70.92. The Lean Hog Cash Index lost another 1.03 to 72.88. The drop in the index limited the April contract on the session.
• Estimated slaughter last week was 2.370 million head, down 4.78% from last week. Total pork production was 514 million pounds last week, down 4.79% from the previous week, and 3.25% below last year.
• The tighter pork supply may have supported retail prices at midday. Hog retail values were firmer at as carcasses were 2.45 higher to 80.35. The load count was light at 134 loads. The afternoon retail close will be key for prices on Tuesday.

DAIRY HIGHLIGHTS: 

• The dairy trade was pressured lower on Monday from heavy offering in the spot cheese barrel trade. Barrels fell 9c lower to $1.63/lb on 8 loads traded.
• Despite the weaker barrel trade, spot butter gained 3.25c and spot cheese blocks added 2.50c. The powder and whey trade held steady.
• This week could be a fairly quiet week for dairy news. There are no reports expected other than the weekly reports and a Supply and Demand report on Tuesday.
• There were 16 loads of spot whey traded in Monday’s session.
• May 2023 class III milk fell 18c lower to $17.77 per cwt. The June contract also closed below the $18 threshold, down 20c to $17.98.

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Author

Amanda Brill