Ahead of the Open | January 8, 2024
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 9 to 12 cents lower.
Wheat: SRW 11 to 14 cents lower; HRW 10 to 13 cents lower; HRS 6 to 8 cents lower.
GENERAL COMMENTS: Grains favored the downside overnight as soybeans continue to lead the complex lower. Lack of export demand, in the form of daily export sales announcements, despite prices on longer term lows has weighed heavily on grains. Outside markets were mixed overnight as front-month crude oil futures saw heavy selling, negating all of last week’s gain. The U.S. dollar index posted modest losses overnight.
Weekend rainfall in South America was heaviest in northeastern Brazil and central Argentina while net drying occurred in other areas. Temperatures were hot in northern Paraguay, southwestern Brazil and northern Argentina. In Brazil, recent drying in Parana, Mato Grosso do Sul and Sao Paulo will continue through Wednesday with warmer-than-normal temps before showers and cooler weather move in late this week into next week. Timely rains are expected across most of Brazil, Argentina, Uruguay and Paraguay over the next two weeks, according to World Weather Inc.
Sudden changes in weather conditions across Ukraine recently and frequent thaws could have a negative impact on winter cereals this year, reducing their resistance, consultancy APK-Inform quoted government scientists as saying. “Potential risks under changing weather conditions are quite high,” the scientists noted, as it reduces hardiness of winter crops. The scientists said the second half of December and the beginning of January had been abnormally warm weather, but the thaw has now been replaced by deep frosts over most the country.
House and Senate negotiators sealed an agreement Sunday to unlock final fiscal year (FY) 2024 appropriations bills (click here for details), after nailing down defense and nondefense spending limits. But there are still significant policy disagreements that often become attached to essential spending bills and the threat of a government shutdown remains. The stopgap measure for four of the spending bills, including USDA, expires Jan. 19 with the other eight funded through Feb. 2. This tight timeframe leaves lawmakers with little time to draft the final legislation and secure its passage in both chambers to avoid a partial government shutdown.
CORN: March corn futures saw limited selling overnight as prices pressure downtrend line support at $4.59 1/2. Further support stands at the psychological $4.50 mark. Meanwhile, bulls are eyeing resistance at $4.62 1/2 then $4.67 1/2 on corrective buying.
SOYBEANS: March soybean futures continue to see persistent selling on a near-daily basis. Prices have fallen six out of the last seven sessions. Support stands at $12.45 1/2 then $12.35. Bulls are targeting resistance at $12.65 3/4 then $12.81 1/2, the 10-day moving average, on corrective buying.
WHEAT: March SRW futures faced heavy selling pressure overnight. Support stands at the psychological $6.00 mark then $5.91 1/4, while bulls are targeting resistance at $6.11 3/4 then $6.21 1/2.
CATTLE: Lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a weaker tone on technical selling. February live cattle futures ended the week with an “outside day down,” a bearish omen to trading this week. The cash cattle market firmed week, which is likely to limit sellers interest, especially considering cash prices are currently above futures. But as the week went on, cash trade weakened, likely due to futures weakness. Wholesale beef prices firmed for the first time in seven days on Friday, as Choice rose $1.26 to $277.16 and Select increased 71 cents to $259.53.
HOGS: Lean hog futures are expected to open mostly lower as concerns over cash fundamentals resurface. While the CME lean hog index posted consecutive days of gains late last week, today’s quote slipped a penny to $65.85 (as of Jan. 4), raising concerns over sustained weakness during the first quarter of the year, similar to 2023. Friday, lean hog futures closed $4.15 above the latest cash quote, which could also limit futures buying, especially considering the surge late last week. Wholesale pork prices slipped 30 cents to $84.20 on Friday, led lower by picnics and bellies.
