Ahead of the Open | January 30, 2024
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 3 to 5 cents higher.
Wheat: Winter wheat 2 to 4 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each favored the downside most of the overnight session, though saw corrective gains into the break with soybeans leading the way higher. The Federal reserve begins their two day meeting discussing monetary policy this morning, leading to an interest rate decision tomorrow afternoon, analysts expect rates to remain unchanged. Outside markets were quiet overnight, as front-month crude oil futures mildly favored the downside and the U.S. dollar index was near unchanged.
South American crop consultant Dr. Michael Cordonnier left his Brazilian crop estimates at 149 MMT for soybeans and 115 MMT for corn, but noted both could move lower if recent dryness in central and southern areas of the country persists. Cordonnier also left his Argentine crop forecasts at 52 MMT for soybeans and 56 MMT for corn. He has a neutral/lower bias toward soybeans given recent heat and dryness in key production areas. His bias is neutral toward the Argentine corn crop, down from neutral/higher due to the heat and moisture stress.
Soybean oil prices on China’s Dalian Commodities Exchange fell for a third consecutive session on Tuesday, with soymeal prices also declining as demand slowed. Soybean oil contract for May delivery fell 3.8% to a seven-month closing low of 7,204 yuan ($1,003.79) a metric ton. That was it biggest daily decline in more than a year. The most-active soymeal contract fell for a fourth straight session to 2,944 yuan ($410.21) per ton, its lowest close since mid-July 2023. Demand from China is weakening as stockpiling ahead of the Spring Festival (Lunar New Year) ends and animal feed demand declines.
State-level winter wheat crop condition ratings released on Monday signaled more general improvement in the HRW crop over the past month, led by top producer Kansas. When the state crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 11.6 points from the end of December to 345.3 and stood 22.0 points above USDA’s final national rating at the end of November.
CORN: March corn futures posted a fresh contract low overnight. Bulls are seeking to overcome resistance at $4.40 1/4, $4.42 1/4, then $4.46 1/4 on corrective buying. Meanwhile, support stands at $4.36 1/2, $4.30, then $4.25.
SOYBEANS: March soybean futures saw corrective buying after posting a fresh for-the-move low overnight. Bulls are targeting resistance at $12.00, $12.05 3/4, then the 10-day moving average at $12.17 1/4 on continued corrective buying. Support stands at $11.94 1/4, $11.87 3/4, then $11.85.
WHEAT: March SRW futures are trading lower for the third consecutive session. Bulls are eyeing resistance at $5.96 1/2, $6.00 and $6.03 3/4 on corrective buying. Former support at $5.88 failed overnight, which capped losses on Monday. Support stands at $5.85, $5.82, then $5.73 1/4.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone, on continued profit-taking. Bulls have maintained a tight uptrend since the early December low and futures have traded near the upper end of the upward sloping channel, which leaves room for additional selling today, though the overarching trend remains higher. Higher cash cattle prices, noted by last week’s average rising $1.68 to $175.44, continue to underpin futures. Packers continue to limit their slaughter runs, closely managing supplies as margins have just recently turned in their favor. That could limit interest in purchasing cash cattle, especially considering fresh contracted supplies become available on Thursday. Wholesale beef prices slipped on Monday, as Choice fell $1.11 to $299.42 and Select dropped 31 cents to $288.82.
HOGS: Lean hog futures are expected to open with a mostly weaker tone as traders narrow premiums to the cash index. The surge in futures over the past week has quickly priced February futures $4.675 above the CME lean hog index, which firmed another 70 cents to $70.60 today (as of Jan. 26). That premium could limit buying interest in futures, as the February contract expires in just over two weeks on Feb. 14. Another consolidation period in futures is possible, similar to the bull flag that capped gains in mid-January. Wholesale pork prices continue to struggle staying above the $90.00 mark. Cutout fell 44 cents to $89.07, led lower by butts. Packers appear to continue to take advantage of rallies, moving additional pork and driving prices lower in the process, as movement topped 300 loads once again at 315.1 loads.
