Ahead of the Open | January 16, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 11 to 13 cents higher.
Wheat: SRW steady to 2 cents lower; HRW steady to 2 cents higher; HRS steady to 2 cents higher.
GENERAL COMMENTS: Soybeans surged on corrective gains overnight, wheat traded higher though saw profit-taking into the break and corn futures saw continued selling pressure though maintained Friday’s reaction low. The Empire State Manufacturing Index, which measures manufacturing activity in New York, plunged to -43.7, the lowest reading since May 2020 and a concerning signpost of the overall economy as 2024 begins. Front-month crude oil futures are trading near unchanged, while the U.S. dollar index surged overnight and is currently over 850 points higher.
USDA reported daily export sales of 126,700 MT of corn for delivery to Mexico during the 2023-24 marketing year.
An anti-ship ballistic missile fired by Houthi fighters struck the Gibraltar Eagle, a U.S.-owned cargo vessel, off the coast of Yemen yesterday. The ship and its crew, which had been headed toward the Suez Canal, were not seriously harmed, according to the U.S. military’s Central Command. The ship turned around to leave the area. This missile attack followed a previous attempt by the Iranian-backed Houthis to target a U.S. Navy ship in the Red Sea. There are concerns this escalation could lead to the Israel/Hamas conflict spreading further in the Middle East. Currently, the U.S. and Iran seem to be avoiding direct combat, despite these tensions.
South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate 2 MMT to 149 MMT amid reports from almost every state of lower-than-expected yields on early harvested fields. He also lowered his Brazilian corn crop estimate 2 MMT to 115 MMT. For Argentina, Cordonnier raised his soybean crop forecast 2 MMT to 52 MMT and increased his corn production estimate 3 MMT to 56 MMT.
Brazil-based consulting firm AgRural now estimates the country’s soybean crop at 150.1 MMT, down 9 MMT from its prior forecast. In addition to reduced production in Mato Grosso, AgRural cited downward adjustments in Paraná, Mato Grosso do Sul, Goiás, São Paulo and Minas Gerais. AgRural estimates Brazil’s total corn production at 114.1 MMT.
CORN: March corn futures continue to fall under selling pressure. Bulls are seeking to hold support at $4.43 1/2 then $4.41. Resistance stands at $4.47, the psychological $4.50 mark, then the 10-day moving average at $4.57 1/4.
SOYBEANS: March soybean futures saw strong corrective gains overnight. Support stands at $12.24 1/4 then $12.03. Bulls are looking for a close above resistance at $12.51 3/4 to put in a reaction low off the report, while additional resistance stands at $12.36 1/2 and $12.48 1/2 on the way.
WHEAT: March SRW futures continue to trend lower on the daily bar chart, though are nearing the lower end of the recent range. Initial support stands at $5.96 1/4, with backing from $5.93 then $5.85. Bulls are targeting resistance at the psychological $6.00 mark, $6.05 3/4, then $6.10 3/4.
CATTLE: Lower.
HOGS: Lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone in continuation of Friday’s selling pressure from technical resistance. Cash cattle trade was reduced last week due to travel restrictions caused by the winter storms. While movement is likely to be increased this week to make up for the lack of trade, this week’s Cattle on Feed Report is likely to push trade towards the end of the week. Stress to livestock due to the extreme cold over the extended weekend and into this week is likely to impact weights and grading, which could limit strength in the cash market. Wholesale beef prices continue to firm, as Choice cutout rose $3.37 to $289.26, marking seven straight days of gains, and Select rose $1.91 to $271.85 on Friday.
HOGS: Lean hog futures are expected to open with a weaker tone as traders look to narrow premiums to the cash index. After three straight days of gains, the CME lean hog index fell 29 cents to $66.48 (as of Jan. 11). While the general consensus is that the cash market has put in a seasonal low, today’s index quote falling and the $5.42 premium that futures hold to the index could lead to some tightening of that spread via futures selling. Wholesale pork prices firmed $1.54 to $86.08 on Friday, led higher by a $5.38 jump in butts, though all cuts except picnics saw gains. Movement has fallen from highs earlier this month as slaughter counts have dropped below historical averages due to the winter storms limiting travel.
