My Account >> Market Comment for 04/16/2024 (Mid-Session)

COMMENTS

CASH WHEAT SALES RECOMMENDATIONS:
1. If May SRW wheat futures close below $5.44, both hedgers and cash-only marketers should sell another 10% of 2023-crop wheat, taking them to 80% sold on last year's crop.

2. If July SRW wheat futures close below $5.60, both hedgers and cash-only marketers should forward contract 10% of expected 2024 production, taking them to 20% sold on this year's crop.

Grain and oilseed futures are mixed at mid-session: Corn is down 1 to 2 cents, and soybeans are down 8 to 10. Wheat is down 4 to 5 cents in Chicago while K.C. hard red winter wheat is flat. Cotton is down 150 to 250 points. Rice futures, which soared yesterday, are up again today by 15 to 30 cents. Tight near-term supplies are driving the market.

In outside markets, the stock market is stabilizing after spending recent days in retreat on expectations that the Fed won't be raising interest rates for a while. The Dow up is 150 points. The dollar index remains firm, and crude oil is down slightly.

While there will be some planting delays through the end of the month in the Midwest, particularly the eastern Corn Belt, what's shaping up is “mostly a normal” planting season, World Weather Inc. says. U.S. weather will be beneficially wet in the upper Midwest and a part of the western Corn Belt today and early Wednesday. The moisture will improve topsoil conditions for use this spring. The U.S. Delta is drying down after too much rain last week.

In Brazil, the states of Mato Grosso do Sul, Mato Grosso, and Goias received much-needed rainfall during the past week, and it could not have been better timed with the arrival of the dry season expected later this week. Rainfall was enough to raise soil moisture and support aggressive Safrinha corn development in the coming weeks. These areas will receive additional rain early this week that will help keep soil moisture at favorable through the end of April and perhaps longer for some areas. In Argentina, abundant rain over the last week is of limited concern because of the return of dry weather.

S. Korea's MFG is said to have bought about 68,000 MT of corn to be sourced from the U.S., S. America or S. Africa in a private deal on Tuesday. The corn was bought at an estimated $244.49 per MT on a cost and freight basis plus an additional $1.50 a ton surcharge for additional port unloading.

Wheat futures remain under pressure at midsession from a strong dollar, technical selling and large Black Sea region wheat supplies, with offers in the latest import tender from Egypt's GASC highlighting continued strong competition in the world export market. Forecast for rains in parts of the U.S. southern Plains may also be a negative market factor.

Both SRW and HRW wheat futures are now working on potential bearish outside trading days as they pushed above their Monday highs overnight but have since fallen through their Monday lows.

As noted earlier this morning, the lowest offer in the GASC import tender is reportedly for 60,000 MT of Ukrainian wheat at $218.90 on a free-on-board basis, which is down from the $234.50 GASC paid in its previous tender that closed on March 20. Traders are still awaiting the results of the current tender.

In other export news, Jordan reportedly made no purchase in its latest import tender for 120,000 MT of milling wheat.

Germany's 2024 wheat crop will fall 6.3% on the year to 20.16 MMT, the country's association of farm cooperatives said in its latest harvest estimate on Tuesday. The forecast was little changed from the association's previous forecast in mid-March.

France's farm ministry has raised its estimate of the country's soft wheat area marginally, but still sees planted area down 7.7% from last year and at the second lowest level in the past 30 years.
LIVESTOCK COMMENTS

ADVICE REMINDER: LIVE CATTLE HEDGERS were earlier advised to buy Dec. 2023 live cattle futures at $179.40 stop-close-only against 25% of 4th qtr. marketings to exit the current short position.

Livestock futures are mostly higher at midsession, but front-end lean hog futures have turned lower under pressure from weaker wholesale pork prices. Lean hog futures ranged from 14 cents lower to 53 cents higher at 12:10 p.m. CT, while live cattle futures $1.15 to $2.00 higher on technical buying and speculative bargain hunting spurred by their discounts to cash, while feeder cattle futures range from $2.30 to $3.05 higher, despite Monday's $3.50 drop in the CME cash feeder cattle index.

July lean hog futures have established nearby chart resistance at $105.05 and have fallen back near $103.50, with nearby chart support at Monday's low of $102.55 and further support at $101.28, the market's late March swing low. Oct. futures have established nearby resistance at $86.38 and have fallen back about 75 cents, with nearby support now at $85.40 and $85.08.

The wholesale pork market is weak this morning with the composite pork cutout value down a steep $4.44 at midsession on a drop of $23.77 in the pork belly component. The national avg. negotiated cash carcass value at midmorning was $86.14 up from Monday's final value of $85.80. The weighted avg. price for hogs sold under swine/pork market formula agreements is $90.83, up from $90.13 on Monday morning. The lagging CME cash lean hog index is 17 cents higher at $90.73 and is expected to rise another 25 cents on Wednesday.

Most-active June live cattle futures have traded as high as $175.80 and are currently about 40 cents below that level with nearby chart support down at $172.88. Dec. live cattle have traded as high as $180.33 and are hovering near $180.00, with nearby support down at $177.70.

Plains direct cash cattle markets remain quiet, with no packer bids reported. Asking prices appear to be starting at $184 or more in the southern Plains, with no asking prices established in northern dressed carcass markets. We still expect that it will again be late in the week before significant trade develops.

Beef cutout values ranged from $2.59 lower to $1.31 higher at midmorning, with the choice/select spread narrowing to $5.64. The avg. packer operating margin is estimated by HedgersEdge at minus $47.35 per head, up from minus $69.40 on Monday.

CURRENT BROCK POSITIONS

BROCK MARKET POSITIONS:

CORN: Cash-only Marketers: 2023 CROP: 60% sold on regular forward contracts and hedge-to-arrive contracts. (5-5-22, 9-29-22, 1-4-23, 1-10-23, 2-24-23, 6-15-23, 7-19-23, 1-2-2024). 2024 CROP: 20% sold on hedge-to-arrive contracts (7-19-23, 8-15-23, 1-2-24).

Hedgers: 2023 CROP: 60% sold on regular forward contracts and hedge-to-arrive contracts (5-5-22, 9-29-22, 1-10-23, 2-24-23, 6-15-23, 7-19-23, 12-13-23, 1-2-24); aside futures. 2024 CROP: 15% sold on hedge-to-arrive contracts (7-19-23, 8-15-23).; aside futures.

SOYBEANS: Cash-only marketers: 2023 CROP: 80% sold on hedge-to-arrive contracts and regular forward contracts (5-4-22, 11-15-22, 12-1-22, 1-4-23, 1-20-23, 2-24-23, 6-15-23, 7-6-2023, 7-19-23, 11-15-23, 12-5-23, 1-2-24). 2024 CROP: 25% sold on hedge-to-arrive contracts (7-19-23, 8-22-23, 11-16-23).

Hedgers: 2023 CROP: 70% cash sold on hedge-to-arrive contracts and regular forward contracts (5-4-22, 11-15-22, 1-4-23, 1-20-23, 2-24-23, 6-15-23, 7-6-23, 7-19-23, 8-22-23, 11-15-23, 1-2-24), aside futures. 2024 CROP: 25% sold on hedge-to-arrive contracts (7-19-23, 8-22-23, 11-16-23).

SRW WHEAT: Cash-only Marketers: 2023 CROP: 70% sold on regular forward contracts and hedge-to-arrive contracts (11-5-21,4-29-22, 10-18-22, 1-10-23, 4-24-23, 6-26-23, 6-30-23, 7-19-23, 8-29-23, 12-11-23); aside futures. 2024 CROP: 10% sold on hedge-to-arrive contracts (7-19-23).

Hedgers: 2023 CROP: 70% sold on regular forward contracts and hedge-to-arrive contracts (11-5-21, 4-29-22, 10-18-22, 1-10-23, 4-10-23, 6-26-23, 6-30-23, 7-19-23,8-29-23, 12-11-23); aside futures. 2024 CROP: 10% sold on hedge-to-arrive contracts (7-19-23); aside futures.

HRW WHEAT: Cash-only Marketers: 2023 CROP: 70% sold on regular forward contracts and hedge-to-arrive contracts (11-5-21, 4-29-22, 10-18-22, 1-10-23, 4-24-23, 6-26-23, 6-30-23, 7-19-23, 8-29-23, 12-11-23); aside futures. 2024 CROP: 10% sold on hedge-to-arrive contracts (7-19-23).

Hedgers: 2023 CROP:70% sold on regular forward contracts and hedge-to-arrive contracts (11-5-21, 4-29-22, 10-18-22, 1-10-23, 4-24-23, 6-26-23, 6-30-23, 7-19-23, 8-29-23, 12-11-23); aside futures. 2024 CROP: 10% sold on hedge-to-arrive contracts (7-19-23); aside futures.

LEAN HOGS: Short July 2024 lean hog futures against 25% of 2nd qtr. marketings (4-10-24); short July 2024 lean hog futures against 25% of 3rd qtr. marketings; short Oct. lean hogs against 25% of 4th qtr. (4-12-24).

LIVE CATTLE: Short Dec. 2024 live cattle futures against 25% of 4th qtr. marketings (3-26-24).

FEEDER CATTLE: Sellers are aside futures. Buyers are also aside futures.

MILK: Aside futures. No cash forward contracts advised.

FEED BUYERS: CORN: 50% of needs through the end of 2nd qtr. purchased in the cash market (3-4-24); long July 2024 corn futures on 25% of 3rd qtr. needs (3-4-24) SOYMEAL: 50% of needs through the end of 2nd qtr. purchased in the cash market (2-5-24, 3-4-24); long July 2024 soymeal futures on 25% of 3rd qtr. needs (3-4-24).

COTTON: Cash-only Marketers: 2023 CROP:100% sold (5-19-23, 7-19-23, 7-25-23, 8-3-23, 8-30-23, 11-1-23, 1-19-24, 2-1-24, 2-9-24, 2-12-24); 2024 CROP: 30% forward contracted (2-12-24, 2-27-24, 4-3-24).

Hedgers: 2023 CROP: 100% cash sold (5-19-23, 7-19-23, 7-25-23, 8-30-23, 1-19-24, 2-1-24, 2-9-24, 2-12-24, 2-28-24, 3-5-24, 3-14-2024). 2024 CROP: 30% forward contracted (2-12-24, 2-27-24, 4-3-24). Short Dec. 2024 cotton futures on 20% of expected 2024 production (4-10-24).

RICE: 2023 CROP:90% cash forward contracted (4-25-23, 5-30-23, 7-20-23, 7-31-23, 8-7-23, 11-22-23, 12-5-23, 1-4-24, 2-13-24). 2024 CROP: No sales recommended.

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NOTE: Along with the potential for profit, there is always a risk of losing money when trading futures and options contracts.
Copyright 2019 by Richard A. Brock & Associates, Inc.
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