Ahead of the Open | December 28, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 4 to 6 cents higher.
Wheat: 5 to 7 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat traded near unchanged most of the night, though buying pressure increased into the break. Low volume trade was present across asset classes overnight as traders are taking an extended holiday break. Attention will remain on South American weather, which is expected to see additional moisture beginning this weekend. Outside market are unfavorable, as front-month crude oil futures are seeing losses for the second session in a row and the U.S. dollar index is trading around 100 points higher, despite being weaker most of the night.
A two-month bond rally in bond prices and expectations of at least six rate cuts over the coming year have driven equities within 1% of all-time highs. The U.S. dollar index has been under heavy selling pressure as well. While the situation is currently bullish, Swissquote analyst Ipek Ozkardeskaya warns of overly optimistic expectations for rate cuts and that the Fed is unlikely to cut at the pace Fed fund futures currently expect. Once more realistic expectations are realized, a downturn in the equity market would be likely, especially considering overbought conditions.
Russia is set to increase fertilizer output by 10% in 2024, bringing production and exports back to 2021 levels, the Russian Fertilizers Producers Association said on Wednesday. Russian fertilizers exports encountered problems following Western sanctions on the nation following their 2022 invasion of Ukraine. While those sanctions remain in place and Russian fertilizer will not find the Western market, an influx of fertilizer should help tame world prices.
Brazil soybean exports are expected to have reached 3.48 MMT in December, down from an expected 3.5 MMT last week. Corn exports are expected to have fallen to 6.96 MMT from an expected 7.17 MMT. Meanwhile, wheat exports are estimated to have risen sharply, though not much wheat was shipped.
CORN: March corn futures traded within Wednesday’s range overnight. Bulls are eyeing resistance at $4.79 1/2 with backing from $4.82 1/2 then $4.83 3/4, while support stands at $4.77 1/4, $4.74 1/2 then $4.72 1/4.
SOYBEANS: March soybean futures saw increased buying into the break. Bulls are seeking a close above resistance at $13.26, with backing from $13.29 1/4, then $13.36 3/4. Meanwhile, support stands at $13.21 3/4, then $13.11 3/4.
WHEAT: March SRW futures saw buying overnight, maintaining the recent uptrend from the mid-December low. Bulls are seeking to close prices above resistance at $6.30, which has spurred heavy selling pressure. Additional resistance lies at $6.42 1/4. Support stands at $6.22, with backing from $6.16 3/4.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a choppy tone as the lack of cash cattle trade thus far this week gives the market little direction. With no cash cattle trade taking place yet and fresh contracted supplies available next week, concerns arise surrounding the cash situation, which could weigh on futures. Shortened slaughter counts both this week and next week are also likely to push steer weights higher, likely marking the seasonal peak for the year, keeping pressure on prices. Wholesale beef prices were weaker on Wednesday, as Choice dropped $1.83 to $291.48 and Select fell 87 cents to $260.32.
HOGS: Lean hog futures are expected to open with a modestly firmer tone following the recent uptick in the CME lean hog index. The index, which rose 12 cents to $65.71 today (as of Dec. 26), is likely to support prices, though traders will be hesitant to believe a seasonal low is in place, especially after last week’s brief rally then fall to fresh lows. Negotiations that are included in the index have fallen substantially as well, leading to potential further weakness once movement picks back up. Wholesale pork prices rose 40 cents Wednesday to $82.52, despite a $5.64 drop in bellies, with movement remaining firm at 331.1, indicating continued robust grocer demand for pork.
