Ahead of the Open | January 25, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 4 to 6 cents lower.
Wheat: SRW steady to 2 cents higher; HRW 1 to 3 cents higher; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Corn and soybeans traded in tight ranges overnight, with corn favoring the upside and soybeans the downside. Wheat futures favored the upside, though saw weakness into the break. Outside markets surged this morning on GDP coming in above expectations of 2.0% at 3.3% on an annual basis. Front month crude oil futures are trading higher and on nine-week highs, while the U.S. dollar index is also trading modestly firmer.
Iranian-backed Houthi militants in Yemen have stepped up attacks on vessels in the Red Sea, saying they fired ballistic missiles at U.S. warships protecting the two U.S. commercial vessels. Shipping firm Maersk said nearby explosions forced two ships operated by its U.S. subsidiary and carrying U.S. military supplies to turn around when they were transiting the Bab al-Mandab Strait off Yemen.
China criticized the U.S. for causing “trouble and provocation” after an American Navy warship sailed through the sensitive Taiwan Strait since presidential and parliamentary elections on the island. “U.S. warships and planes have caused trouble and provocation on China’s doorstep, and carried out large-scale, high-frequency activities in waters and airspace around China,” Chinese Defense Ministry spokesperson Colonel Wu Qian said. The U.S. Navy said the destroyer USS John Finn transited through a corridor in the Taiwan Strait that was “beyond the territorial sea of any coastal state.” Wu said China’s response in driving away the ship was “justified, reasonable, professional and restrained.”
Export sales for the week ended Jan. 18:
Corn: Net sales of 954,800 MT for 2023-24, down 36% from the previous week but up 45% from the four-week average. Increases came primarily for Mexico, which made up over half of the total. Sales came in the middle of expectations of 725,000 MT to 1.4 MMT.
Soybeans: Net sales of 560,900 MT for 2023-24, down 28% from the previous week but up 6% from the four-week average. Increases came primarily for China and Mexico. Sales fell short of expectations of 700,000 MT to 1.2 MMT.
Wheat: Net sales of 451,400 MT for 2023-24, down 36% from the previous week but up 45% from the four-week average. Increases came primarily for Mexico and the Philippines. Traders expected sales between 200,000 and 625,000 MT.
CORN: March corn futures traded in a tight range overnight. Bulls are seeking to overcome resistance at $4.56 on continued strength, which is backed by $4.59 1/2. Meanwhile, support stands at the 10-day moving average at $4.50 1/2, then $4.47.
SOYBEANS: March soybean futures have seen limited volatility the last two sessions. Bulls are looking to overcome initial resistance at $12.47 1/2 before tackling the 20-day moving average at $12.50 3/4. Bears are seeking to break support at $12.35 1/4 then $12.25.
WHEAT: March SRW futures continued the recent bounce overnight, though went into the break nearer session lows. Bulls are targeting resistance at $6.18 1/4 with backing from $6.21 1/2, then $6.30. Support stands at $6.10, the 40-day moving average at $6.05 1/2, then the psychological $6.00 mark.
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone as prices continue to grind higher on the daily bar chart. The recent uptrend in futures has allowed for steady gains and shows signs of a healthy market. Futures are likely to be supported by higher cash cattle prices as well, as cash sources reported initial trade around $174.00 in Texas on Wednesday, which would be up $1.00 from last week’s activity in the state. That sets expectations that cash prices will be at least $1.00 higher than last week’s average of $173.76. Wholesale beef prices slipped as Choice struggles to remain above the $300.00 mark. Choice cutout fell $2.16 to $299.50 and Select dropped $1.14 to $287.24. USDA reported net beef sales of 22,400 MT for 2024. Beef sales remain robust since the beginning of the new year.
HOGS: Lean hog futures are expected to open higher on continued technical strength, though some profit-taking is possible. Prices have surged for two consecutive session as April futures lead the way higher. Premiums seen to the CME lean hog index, which is up another 63 cents to $69.39 (as of Jan. 23), could limit buying interest in futures. The index is up $4.34 from the low at the beginning of this month, though still remains $2.72 below year-ago. Pork cutout rose 83 cents to $88.86 on Wednesday, with gains driven by a $7.78 jump in bellies. But all other cuts except loins declined, which opens the door for weakness as packers continue to move inventory, taking advantage of cutout being near the highest level in two months. USDA reported net pork sales of 24,100 MT for 2024.
