Ahead of the Open | December 1, 2023
GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 11 to 14 cents lower.
Wheat: SRW 5 to 7 cents lower; HRW 10 to 12 cents lower; HRS 8 to 10 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw selling pressure overnight and went into the break near session lows with soybeans leading the way lower. Outside markets were quiet overnight, as front-month crude oil futures are trading modestly higher after trading lower most of the night and the U.S. dollar index is trading around 75 points higher. The dollar index saw sharp gains on Thursday, which is likely weighing on commodities today.
USDA announced daily sales of 330,000 MT of soybeans, with 132,000 MT going to China and 198,000 MT going to unknown destinations- both for the 2023-24 marketing year. This marks the third day of daily sales for soybeans this week.
USDA is expected to report October soybean crush jumped to an all-time high of 199.2 million bu. for October based on a Bloomberg survey. That would be up 24.5 million bu. (14.0%) from September and 2.5 million bu. (1.3%) above last year. Corn-for-ethanol use is expected to rise to 452.7 million bu., up 22.6 million bu. (5.3%) from September and 4.1 million bu. (0.9%) higher than October 2022.
USDA’s updated ag trade forecast for fiscal year (FY) 2024 calls for exports of $169.5 billion (down $2.5 billion from August) against imports of $200.0 billion (up $500 million). That would result in an ag trade deficit of $30.5 billion for FY 2024, up from the August projection of $27.5 billion and red ink of $16.7 billion in FY 2023. Bottom line: The trade outlook for U.S. agriculture in FY 2024 reflects a complex interplay of economic factors, global demand and trade dynamics, with potential growth opportunities in diverse markets. But U.S. ag sector and farm-state lawmaker concerns are accelerating regarding President Joe Biden’s trade policy. They note that unless trade barriers are reduced or eliminated in targeted countries, promotion funding won’t help.
Argentina, under the leadership of incoming President Javier Milei, has decided not to join the China-led BRICS bloc. This decision reflects a notable shift in the country’s foreign policy that is anticipated to take place during his presidency.
CORN: March corn futures saw renewed selling strength overnight, breaking prices below initial support at $4.81 1/2. Bulls are seeking to hold additional support at $4.75 before a likely test of Wednesday’s for-the-move low at $4.70 1/2. Bulls are eyeing a break above $4.81 1/2 before tackling resistance at $4.85 1/4, then $4.90.
SOYBEANS: January soybean futures faced steady selling pressure overnight, taking prices back down to the recent lows. Initial resistance lies at the 40-day moving average, currently at $13.41 1/4, backed by this week’s high of $13.52. Bulls are seeking to hold downtrend line support at $13.25, backed by Monday’s low of $13.23 1/2, then $13.19 1/2.
WHEAT: March SRW futures saw corrective selling overnight following three steady sessions of gains. Bulls failed to keep prices above the 40-day moving average at $5.96 overnight, marking that area as initial resistance, which has backing from the $6.00 mark, then $6.11 1/2. Prices were supported by 20-day moving average support at $5.87 3/4, which has backing from $5.85, then $5.78 1/2.
CATTLE: Choppy/higher.
HOGS: Higher.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone, led by technical buying, though eroding cash cattle prices could limit gains, as cash cattle trade has been mostly $1.00 to $3.00 lower on a live basis and as much as $4.00 lower for the dressed market. Futures resumed lower on Thursday, though technical buying limited losses and prices finished well off session lows, indicating support under the market. Wholesale beef prices continue to trade largely sideways as well despite weakness in futures and cash cattle, with Choice rising $1.99 to $299.02 and Select firming 66 cents to $264.75 on Thursday.
HOGS: Lean hog futures are expected to open with a firmer tone in continuation of recent strength. Following the breakdown last week that bled into Monday, futures have surged from lows, though they have gained back only about half of the drawdown. With such aggressive buying throughout the session yesterday, traders are likely to continue underpinning the market today. The CME lean hog index fell another 18 cents to $71.35 today (as of Nov. 29), remaining $2.575 above December futures, indicating likely persistent seasonal weakness in the index. Wholesale pork prices fell 14 cents to $83.83 Thursday on a firm 321.01 loads, indicating packers have substantial inventory to move, which could limit gains in futures today.
