Ahead of the Open | December 27, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents lower.
Wheat: SRW 6 to 8 cents lower; HRW 4 to 6 cents lower; HRS 2 to 4 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw losses overnight on light volume, though corn and beans each saw increased buying into the break. Trade is likely to continue to be light volume as traders take an extended holiday break. Outside markets were quiet overnight, as front-month crude oil futures saw moderate selling from recent highs and the U.S. dollar index traded on five-month lows.
Dr. Michael Cordonnier lowered his Brazilian soybean estimate 2 MMT to 153.0 MMT, citing variable coverage and amounts of rainfall over the past week. He noted while the forecast is calling for more rain, models have been overly optimistic, so it is important to see if the rains verify. He maintains a neutral to lower bias. For Brazilian corn, Cordonnier left his estimate unchanged at 117.0 MMT, though maintains a lower bias, noting production depends on safrinha acreage and yield. He left his Argentine crop estimates at 50.0 MMT for soybeans and 53.0 MMT for corn.
A report from the Rosario Stock Exchange details that grain production for the 2023-24 cycle is estimated at around 137 million tons, supported by weather recovery after the last three droughts. This projection would result in exports of approximately $35.8 billion. The study indicates that the expected harvest would represent an increase of 65% compared to the previous campaign, which was marked by a significant drought, although it would be slightly below the historical record of 140 million tons reached in 2018-19.
U.S. led efforts to enhance security against attacks on vessels are giving transporters confidence to increase the number of vessels sent into the Red Sea following a string of attacks on civilian ships. France's CMA CGM has increased the number of ships traveling through the Suez Canal. Germany's Hapag-Lloyd is expected to decide on whether to return to using the Red Sea on Dec. 27. Maersk has also announced its preparations to resume shipments in the Red Sea and Gulf of Aden.
CORN: March corn futures saw profit taking overnight, with prices falling back below the 20-day moving average at $4.79 3/4, which will now be initial resistance. Further resistance stands at $4.84 1/2, while support comes in at $4.77 1/4 then $4.72 1/2.
SOYBEANS: March soybean futures selling pressure off initial resistance at $13.20 overnight. Further resistance stands at $13.29, while bulls are trying to hold support at $13.11 3/4 then $13.01 3/4 on additional selling.
WHEAT: March SRW futures saw sharp losses overnight, though traded within Tuesday’s range. Bulls are seeking to hold support at $6.25 with backing from $6.15 3/4. Meanwhile, resistance stands at $6.39 3/4, then $6.49 1/2.
CATTLE: Choppy/lower.
HOGS: Lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone, driven by technical selling in futures from levels that have capped gains over the past week. Last week’s cash cattle average was $170.51, up $1.80 from the prior week. While that helped spur futures gains on Tuesday, another shortened kill schedule is likely to limit packer interest in purchasing cattle, especially after last week’s substantial purchases and fresh contracted supplies becoming available next week. Wholesale beef prices firmed on Tuesday, as Choice rose 38 cents to $293.31 and Select rose 4 cents to $261.19, though movement was weaker at just 69 loads.
HOGS: Lean hog futures are expected to open with a weaker tone as the technical posture eroded with Tuesday’s selloff. The CME lean hog index fell another 66 cents to $65.59 (as of Dec. 22), marking a fresh seasonal low. February futures remain $3.71 above the index, leading to potential further weakness, especially considering a seasonal low is rarely put in place in the week between Christmas and New Years. Wholesale pork prices slipped despite a $10.10 jump in primal bellies, as overall cutout dropped 9 cents to $82.12. While cutout values dropped, movement remains firm at 298.1 loads, especially impressive considering the Holiday, showing continued grocer demand for pork.
