Ahead of the Open | January 18, 2024
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: Steady to 2 cents lower.
Wheat: SRW 4 to 6 cents lower; HRW 3 to 5 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw limited volatility overnight, mildly favoring the downside. Each are trading near their for-the-move lows. Outside markets were quiet overnight as well, as front-month crude oil futures pivoted near unchanged and the U.S. dollar index did the same. The weekly Jobless Claims report from the Department of Labor signaled the number of Americans as filing for unemployment at 187,000, the least since Sept. 2022, which limited risk appetite in the marketplace as it points to a robust labor market. The Fed has been looking for a slowdown in the labor market, today’s report signals that more work may need to be done before any potential rate cut.
The U.S. launched more strikes on Yemen’s Houthis overnight, citing an “imminent threat” to merchant vessels and U.S. Navy ships in the Red Sea area. Hours later, Pakistan launched retaliatory missiles against militants in Iran in the latest incident to roil the wider region. The attacks have had consequences for the global economy as they have effectively closed off the Red Sea — one of the main trade routes for container ships. Of note: Iran is embroiled in an escalating spat with its southeastern neighbor Pakistan, which targeted locations inside Iran a day after deadly Iranian strikes on separatists in Pakistani territory. The new strikes mean both countries have now taken the extraordinary step of attacking militants on each other’s soil at a time of expanding conflict in the Middle East and the broader region.
The Senate will begin voting on a continuing resolution (CR) to fund the federal government through early March at 12:30 p.m. ET. There will be several votes, including amendments that will be rejected. The short-term spending measure is expected to clear the Senate and will then be sent to the House where it faces GOP conservative opposition but widespread support among Democrats. Of note: The Washington area is bracing for a major snowstorm. House leadership will face pressure to bring up the CR today instead of Friday.
Ukraine’s ambassador to Turkey said “certain negotiations” were underway regarding the UN-brokered Black Sea grain export initiative that ended last summer. “Unfortunately, this grain initiative is not functioning at the moment, although certain negotiations are ongoing to find a format for possible assistance from international partners to Ukraine,” Vasyl Bodnar said, though he provided no details.
CORN: March corn futures continue to trade near contract lows. Bulls failed to sustain corrective gains on Wednesday and are now seeking to hold support at $4.40, with little backing until the psychological $4.25 mark. Resistance stands at $4.43 1/2, $4.47, then $4.52.
SOYBEANS: March soybean futures continue to trade on seven-month lows. Support stands at $12.05, $12.03, then the psychological $12.00 mark. Meanwhile, bulls are targeting resistance at $12.20 3/4, $12.24 1/4, then the 10-day moving average at $12.36.
WHEAT: March SRW futures failed to sustain Wednesday’s intraday rally and are trading on six-week lows. Bulls are seeking to hold support at $5.76 3/4 with backing from $5.70 1/2 then $5.67 3/4, while resistance stands at $5.84 1/2 then $5.95.
CATTLE: Higher.
HOGS: Higher.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone, continuing Wednesday’s late strength. While February futures closed lower on Wednesday, that was the only contract in the complex to do so and it closed well off intraday lows. Prices continue to grind higher on the daily bar chart, showing a healthy technical rally with no early signs of stalling. Cash cattle trade has yet to take place this week as packers and feedlots likely are waiting for Friday’s USDA Cattle on Feed Report. Live weights have stayed near record highs despite the cold snap, which could signal impacts to weights and quality were less than originally thought. Wholesale beef prices continue to surge, as Choice cutout jumped another $3.46 to $298.45, marking nine straight days of gains. Select rose $3.04 to $283.02, the highest level since Oct. 24.
HOGS: Lean hog futures are expected to open with a firmer tone as robust strength continues to underpin the market. While futures have seen selling pressure on the past two opens, bulls have quickly defended technical support, closing prices nearer session highs on Wednesday. The CME lean hog index is up another 49 cents to $67.34 (as of Jan. 16), marking gains in six out of the last seven days. The index is now up $2.29 from what appears to be the seasonal low. February futures have outpaced gains in the index and are currently $4.11 above the index. Futures strength is likely to persist, though will be sensitive to any weakness in the index given current premiums. Wholesale pork prices rose 17 cents to $87.96 Wednesday, near the upper end of the recent range but down from the midsession quote.
