Ahead of the Open | January 29, 2024
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 5 to 8 cents lower.
Wheat: SRW 8 to 10 cents lower; HRW 11 to 13 cents lower; HRS 7 to 9 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw continued selling pressure overnight, though saw modest corrective gains from session lows into the break. Outside markets were quiet overnight in seemingly directionless trade. Front-month crude oil futures saw modest losses and the U.S. dollar index continued to trade near recent highs, around 200 points higher.
A drone attack on a base in Jordan killed three U.S. troops on Sunday, and at least 34 others were injured, with President Joe Biden blaming Iran-backed militants and vowing to hold the perpetrators to account. It is the first time U.S. military personnel have been killed by hostile fire in the Middle East since the start of the Israel/Hamas war, and the incident will further raise tensions in the region and fuel fears of a broader conflict directly involving Iran. Hamas said the death of the soldiers shows Washington’s backing for Israel could put it at odds with the whole Muslim world if the Gaza war continues. A spokesman for Iran’s Foreign Ministry, Nasser Kanaani, said at a news conference on Monday that the militias “do not take orders” from Iran and act independently to oppose “any aggression and occupation.” He said accusations that Iran had ordered the strike were “baseless,” and blamed Israel and the U.S. for fueling instability in the region.
Argentina will continue to dry out this week, stressing corn and soybeans, especially in Buenos Aires and La Pampa. World Weather Inc. says there is better rainfall potential for the country next week. The forecaster notes southern and western Brazil will remain mostly dry this week, though rains should gradually move into these areas next week. Northeastern Brazil will continue to receive favorable rainfall.
Brazil’s soybean harvest reached 11% done as of last Thursday, according to AgRural, ahead of the 5% clip last year. Although the harvest continued at a fast pace, progress lost a little momentum due to increased rainfall in several states, including top producer Mato Grosso, which has had a frustrating growing season. AgRural noted “rains arrived at a good time in areas of several states that had been filling under strong heat and low humidity, especially in Paraná.” AgRural estimated safrinha corn planting reached 11% done, ahead of 5% last year at this time.
CORN: March corn futures continued Friday’s weakness overnight. Resistance stands at $4.43 1/2, $4.47, then $4.50. Bulls are seeking to hold support at $4.42 1/4, with backing from $4.40, then the contract low at $4.36 3/4.
SOYBEANS: March soybean futures made a fresh for-the-move low overnight. Bulls are looking to overcome resistance at $12.09 1/4, with significant backing at $12.25. Meanwhile, support stands at the psychological $12.00 mark, quickly backed by the overnight low at $11.98, then $11.85.
WHEAT: March SRW futures continue to face steady selling pressure. Bulls are seeking to overcome resistance at $5.96, backed by the psychological $6.00 mark, then $6.05. Prices have returned to downward trendline support at $5.89, which capped losses overnight. Further support stands at $5.82.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone, though some profit-taking is possible after the open. Live cattle futures have rallied for four consecutive sessions, with gains last week underpinned by a surging cash cattle market. Through last Thursday, cash cattle trade averaged $175.39, which would be up $2.12 from the prior week. Cash cattle prices are expected to remain firm this week, as packers are still thought to be short-bought on near-term needs. Dressed weights fell sharply following the cold snap in mid-January, falling below year-ago levels for the first time since late fall. That continues to support wholesale beef prices, which were firmer on Friday. Choice cutout rose $1.85 to $300.53 and Select firmed $1.28 to $289.13.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though premiums futures hold to the CME lean hog index could limit gains. The CME lean hog index is up another 23 cents to $69.90 (as of Jan 25), the highest since Dec. 1, when prices were falling. Lean hogs have been supported by concurrent gains in the live cattle market over the past week, driving prices higher to the point that could induce some profit-taking, especially considering February futures (which expire Feb. 14) finished Friday just over $5.00 from today’s cash quote. Wholesale pork prices have stabilized after failing to overcome the $90.00 mark last week, which inspired offloading of supplies from packers that drove prices lower. Cutout rose 60 cents to $89.51 Friday, with gains in all cuts except ribs.
