Ahead of the Open | January 5, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 8 to 10 cents lower.
Wheat: SRW 1 to 3 cents lower; HRW steady to 2 cents lower; HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn and wheat favored the upside most of the night but saw renewed selling into the break, while soybeans saw steady selling pressure most of the overnight session. Export sales coming in below expectations for each of the three are likely to limit buying interests today. Outside markets saw volatility following this morning’s release of the Nonfarm Payrolls (NFP) report. Front-month crude oil futures reversed yesterday’s losses and are trading solidly higher this morning, while the U.S. dollar index is around 150 points higher, though well off overnight highs.
The Bureau of Labor Statistics (BLS) released their monthly NFP report this morning. The report showed the U.S. labor market adding 216,000 jobs in December, above expectations of 170,000 jobs. The unemployment rate ticked down to 3.7%, below expectations of 3.8%. The November jobs report was revised lower to 173,000 jobs versus 199,000 jobs previously.
The U.S. ag attaché in Brazil cut the country’s soybean crop forecast by 3.5 MMT to 158.5 MMT “due to poor weather outlooks resulting from El Niño, particularly in the Centre West states.” That’s still well above most private crop forecasters, many of which are in the low 150-MMT area. In December, USDA lowered its Brazilian soybean production forecast to 161 MMT.
A Houthi drone ship filled with explosives detonated Thursday after being launched from Yemen and coming within “a couple of miles” of U.S. Navy and commercial vessels in the Red Sea. The U.S. and allies this week warned of “consequences.” Meanwhile, shipping company Maersk announced it will redirect all vessels originally scheduled to pass through the Red Sea and Gulf of Aden to now travel around the Cape of Good Hope for the foreseeable future. This decision comes as a response to the ongoing security risks in the region, characterized by volatility and elevated security threats.
Export sales for the week ended Dec. 28:
Corn: Net sales of 367,500 MT for 2023-24, a marketing year low and down 70% from the previous week and the four-week average. Increases came primarily for Mexico and Colombia. Sales came in below expectations expectations of 500,000 MT to 1.2 MMT.
Soybeans: Net sales of 201,600 MT for 2023-24, a marketing year low and down 80% from the previous week and 85% from the four-week average. Increases came primarily for Spain and the Netherlands. Sales came below expectations of 500,000 MT to 1.3 MMT.
Wheat: Net sales of 131,600 MT for 2023-24, down 52% from the previous week and 79% from the four-week average. Increases came primarily for China and Mexico. Sales came in below expectations of 150,000 and 450,000 MT.
CORN: March corn futures have struggled to garner much bullish momentum off contract lows. Bulls are looking to hold support at $4.63 3/4 then $4.61 3/4 on further selling, while firmer support comes in at the psychological $4.50 mark. Resistance stands at $4.66 1/2, then the 10-day moving average at $4.70.
SOYBEANS: March soybean futures continue to face persistent selling pressure. Initial support lies at $12.58 3/4, downward trendline support that prices have rode lower for four straight sessions. Further support stands at the $12.50 mark. Meanwhile, bulls are eyeing resistance at $12.77, with backing from the 10-day moving average at $12.89 3/4.
WHEAT: March SRW futures saw continued corrective buying for most of the overnight session. Bulls are seeking a daily close above resistance at $6.15 before tackling the 100-day moving average at $6.24. Additional resistance lies at $6.35. Support stands at $6.12, $6.06, then the psychological $6.00 mark.
CATTLE: Higher.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open mostly higher on continued strength in the cash market and technical buying. Thursday’s low coincided with the resistance zone that capped most gains over the last two weeks. After retesting that spot, prices turned higher, a bullish technical cue. Additional cash cattle trade took place near the $175.00 mark and feedlots in the Southern Plains raised asking prices to $177.00 following early week strength. This week’s cash cattle average is likely to rise at least another $2.00. Meanwhile, wholesale beef prices continued to fall, pushing packer margins deeper into the red. Choice cutout dropped $2.13 to $275.90 and Select fell 3 cents to $258.82. USDA reported net beef sales of 9,500 MT for 2023, up notably from the previous week and up 69% from the four-week average. Net beef sales totaled 7,100 MT for 2024.
HOGS: Lean hog futures are expected to open higher on continued strength from Thursday’s limit-higher close. Daily trading limits for futures will be expanded to $5.50 today in lean hog futures due to yesterday’s limit close. Strength in the CME lean hog index, which rose 67 cents to $65.86 today (as of Jan.3), apparently spurred buying as traders are growing more confident that a seasonal low could be in place. Today’s gain marks the largest daily rise since last July in the index. Wholesale pork prices rebounded from Wednesday’s weakness, with cutout rising $1.72 to $84.50, led by strength in bellies and picnics, though all cuts except hams saw gains. Movement totaled an exceptional 436.4 loads, showing robust grocer demand. USDA reported net pork sales of 17,800 MT for 2023, which were down 25% from the previous week and 35% from the four-week average. Net pork sales totaled 9,900 MT for 2024.
