Ahead of the Open | December 5, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 7 to 10 cents higher.
Wheat: Steady to 2 cents higher;
GENERAL COMMENTS: Corn futures continued to show relative strength overnight, soybeans saw corrective buying from recent selling and wheat futures saw profit taking, though each saw buying into the break. Front-month crude oil futures traded fresh for-the-move lows though surged this morning following an announcement of further OPEC+ production cuts. The U.S. dollar index saw mild losses, as the 10-year treasury dropped to 4.2%, the lowest since Sept. 1.
This morning, USDA reported daily sales of 198,000 MT of SRW wheat for delivery to China during the 2023-24 marketing year.
South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate 1 MMT to 157 MMT, saying recent rains came too late for a full recovery in early planted soybeans in central Brazil. He noted soybean harvest started in remote areas of Mato Grosso last week, a month earlier than normal, with yields predictably well below average. Cordonnier cut his Brazilian corn crop estimate 3 MMT to 118 MMT, saying “all indications point to smaller safrinha corn acreage.” Cordonnier left his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn.
Brazil exported 5.196 MMT of soybeans in November, slightly topping the previous record for the month. For the first 11 months of 2023, Brazil exported nearly 98 MMT soybeans, up almost 18% from the prior record from two years ago. Brazil exported a record 7.406 MMT of corn during November, far exceeding the previous high for the month. For August through November, Brazil shipped almost 34 MMT of corn, 28% more than the prior record for that four-month period.
Ratings agency Moody’s cut its outlook on China’s government credit ratings to negative from stable, in the latest sign of mounting global concern over the impact of surging local government debt and a deepening property crisis on the world’s second-largest economy. The downgrade reflects growing evidence Beijing will have to provide more financial support for debt-laden local governments and state firms, posing broad risks to China’s fiscal, economic and institutional strength, Moody’s said. The action by Moody’s was the first change on its China view since it cut its rating by one notch to A1 in 2017, also citing expectations of slowing growth and rising debt. While Moody’s affirmed China’s A1 long-term local and foreign-currency issuer ratings – saying the economy still has a high shock-absorption capacity – it expects the country’s annual GDP growth to slow to 4.0% in 2024 and 2025, and to average 3.8% from 2026 to 2030.
CORN: March corn futures remained pinned between moving average support and resistance. The upside has been capped by the 20-day moving average, currently at $4.85 3/4, for three straight sessions on a closing basis. Additional resistance lies at $4.90. Meanwhile, the 10-day moving average, currently at $4.83 1/2, has limited the downside. Further backing lies at $4.78 1/2.
SOYBEANS: January soybean futures saw corrective buying overnight. Resistance looms at the $13.20 mark, backed by converging moving average resistances near $13.32. Significant volume came in under the market at $13.05 Monday marking that area as significant support, with backing at the psychological $13.00 mark, then $12.89.
WHEAT: March SRW futures saw profit taking overnight, though losses remained limited following Monday’s surge. Resistance stands at $6.22, then the 100-day moving average at $6.26, which capped gains the past two sessions. Further resistance stands at $6.31. Bulls are looking to hold support at $6.11 then the psychological $6.00 mark on further corrective selling.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone, though technical support and oversold conditions could limit selling pressure after the open. Futures continue in a sharp downtrend on the daily bar chart, with yesterday’s low coinciding with downtrend support, which could underpin the market temporarily. Cash cattle prices continue to fall, as last week’s cash average dropped to $174.45 from $176.77 the prior week. Weakness in futures is likely to translate to weaker cash cattle trade once again this week, despite continued tight quality market-ready cattle supplies. Wholesale beef prices slipped on Monday, as Choice cutout fell $2.47 to $294.99 and Select dropped $2.66 to $262.83.
HOGS: Lean hog futures are expected to open with a weaker tone, as the CME lean hog index continues to decline seasonally and technical resistance looms overhead. February futures firmed on Monday though struggled against last week’s highs, which are likely to continue acting as resistance. The CME lean hog index fell another 74 cents to $69.84 (as of Dec. 1). Meanwhile, wholesale pork prices showed relative strength on Monday, which could limit selling pressure in futures today. Pork cutout firmed 88 cents to $84.43 on a firm 312.33 loads, indicating robust retailer buying despite considerable amounts of pork being sold.
