Ahead of the Open | January 10, 2024
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 6 to 8 cents lower.
Wheat: SRW 1 to 3 cents lower; HRW 4 to 6 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Grains saw renewed selling pressure overnight, negating much of Tuesday’s rally in corn and soybeans, though wheat futures pared overnight losses into the break. Selling pressure on the open has been the norm, so a change from that weakness could be a key sign that selling is exhausted. Outside markets were supportive overnight as front-month crude oil futures continued to bounce and the U.S. dollar index saw moderate losses.
Conab slashed the Brazilian soybean crop forecast by 4.9 MMT to 155.3 MMT, though that’s still higher than many private crop forecasters. The Brazilian government’s crop estimating agency lowered its Brazilian corn crop forecast 925,000 MT to 117.6 MMT. That cut was entirely to the first crop, as Conab maintained its safrinha corn projection, as it normally does until February.
Ukraine’s agricultural product exports via its alternative Black Sea corridor reached 4.8 MMT in December, surpassing the maximum monthly total shipped via a former UN-brokered grain deal, brokers said on Wednesday. Ukraine launched the corridor along its western Black Sea coast near Romania and Bulgaria in August after Moscow withdrew from the U.N.-brokered deal in July and threatened to treat all vessels as potential military targets.
In less than two weeks, Congress may need to pass another short-term bill, known as a continuing resolution (CR), to prevent a partial government shutdown. This development could potentially force House Speaker Mike Johnson (R-La.) to go back on his vow to avoid such measures. Senate Minority Leader Mitch McConnell (R-Ky.) acknowledged the dwindling time left before the deadline and suggested Congress would have to enact a stopgap CR to keep the government funded while they continue working on the full-year fiscal 2024 budget. Senate Minority Whip John Thune (R-S.D.) signaled a CR until March may be necessary. The current interim spending law funds some government functions (including USDA) until Jan. 19 and the rest until Feb. 2. Some House Republicans have expressed their opposition to short-term measures and have even threatened to revolt if faced with another one. During a meeting with top House Republicans, Johnson indicated he was not interested in a short-term spending bill, despite McConnell’s suggestion.
CORN: March corn futures saw renewed selling strength overnight. Bulls are eyeing a close above resistance at $4.59 to negate Monday’s breakdown below support, with further resistance at $4.63 3/4. Support stands at $4.55, $4.52, then the psychological $4.50 mark.
SOYBEANS: March soybean futures gave up all of Tuesday’s gains overnight. Bulls are seeking to close prices above resistance at $12.69 to indicate an interim low could be in place, with additional resistance at $12.51 1/2 on the way. Support stands at $12.34 then the psychological $12.25 mark.
WHEAT: March SRW futures failed to build on Tuesday’s strength overnight, though the downside remained largely intact. Bulls are seeking to close prices above resistance at $6.11, with further resistance at $6.13, then $6.23. Support stands at $6.00 1/4 then $5.94.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone as technical selling is likely to persist. February futures continue to butt up against downward trendline resistance stemming the September high. Tuesday’s slaughter was heavily impacted by the winter storm, with estimated slaughter totaling only 94,000 head, which would be down 32,000 head from week-ago and 36,000 head from last year. That could limit cash cattle demand over the coming week, though concerns over the coming cold stressing livestock, which has lows estimated in the -20s in the Plains, could limit that impact on futures. Wholesale beef prices were higher again on Tuesday, as Choice rose $1.33 to $280.16 and Select rose $3.47 to $262.83.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, in continuation of yesterday’s bullish breakout. Sellers emerged late in the session on Tuesday, indicating some resistance near the December highs, which could limit buying interest today. The CME lean hog index has risen three days in the last week, rising 9 cents to $65.83 (as of Jan. 8), giving confidence that a seasonal low is in place or is near, helping spur the recent four-day rally. The $6.045 premium that February futures hold to the index could limit buying in futures as well. Wholesale pork prices slipped on Tuesday despite midsession gains, falling 49 cents to $84.53. Movement remained impressive despite the winter storm limiting transit at 349.8 loads.
