Ahead of the Open | February 5, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 5 to 7 cents lower.
Wheat: SRW 6 to 8 cents lower; HRW 8 to 10 cents lower; HRS 5 to 7 cents lower.
GENERAL COMMENTS: Soybeans saw action on both sides of unchanged before selling lower into the break, while corn and wheat traded lower most of the overnight session. Higher bond yields following last week’s FOMC meeting and robust labor market data have concerned the general marketplace, sending most assets lower. Front-month crude oil futures pivoted near unchanged while the U.S. dollar index is over 500 points higher, making fresh for-the-move highs.
Hot, dry weather dominated Argentina weather during the weekend, further stressing crops. World Weather Inc. says showers will occur in parts of Argentina through midweek that may reduce some of the stress, with better rainfall chances the second half of the week into next week. Mato Grosso do Sul, Brazil, will get some scattered rainfall this week to help ease its dryness, though more will be needed. Other areas in southern Brazil may have to wait until the weekend or next week for more meaningful rain to ease dryness. The remainder of Brazil crops will stay in good condition.
Brazil’s soybean harvest advanced to 16% done as of last Thursday, according to AgRural, the second fastest rate behind 19% on that date in 2018-19. Hot, dry weather in southern areas of the country pose a threat to later-maturing soybeans, and if they persist, could lead to further cuts to production. AgRural estimated safrinha corn planting reached 27% completed as of last Thursday, the fastest rate in its data back to 2013.
The U.S. intends to launch further strikes at Iran-backed groups in the Middle East, White House National Security Adviser Jake Sullivan said on Sunday, after hitting Tehran-aligned factions in Iraq, Syria and Yemen over the weekend. The U.S. and Britain unleashed attacks against 36 Houthi targets in Yemen, a day after the U.S. military hit Tehran-backed groups in Iraq and Syria in retaliation for a deadly attack on U.S. troops in Jordan.
USDA reported daily sales of 155,000 MT of corn for delivery to Mexico during the 2023-24 marketing year.
CORN: March corn futures continue to bleed lower. Resistance stands at $4.43 1/4 then the 10-day moving average at $4.45 3/4. Bulls are seeking to hold support at $4.40 1/4 then $4.36 1/2 on further selling.
SOYBEANS: March soybean futures made a fresh for-the-move low overnight. Bulls are seeking to overcome resistance at $12.03 1/4, with further backing at $12.07 1/4. Meanwhile, support stands at $11.82, $11.77, then $11.59 3/4.
WHEAT: March SRW futures continue to struggle garnering much momentum either way. Prices slipped overnight, once again failing to overcome the 40-day moving average at $6.03 1/2. Further resistance stands at $6.10 1/2. Support stands at $5.91 1/2 with further backing from $5.85 1/2.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, though some profit-taking could limit gains after the open. Packers actively raised cash cattle bids last week and bought a lot of cattle. That could slow their appetite for cattle this week. Cash sources come into the week anticipating firmer cash prices once again, though active trade is not likely until after midweek. Dressed weights continue to slide following their peak in late 2023, with the mid-January artic weather extenuating that drop. The falling weights should support both wholesale beef and cash cattle prices as total supply of beef is more limited. Wholesale beef prices were mixed on Friday as Choice dropped $1.86 to $293.08 and Select rose 22 cents to $283.47.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though the recent consolidation pattern could continue and limit gains. Following the late-January surge, April futures have been consolidating in an apparent bull-flag pattern on the daily bar chart. Seasonal gains in the CME lean hog index should provide support if futures continue to slide lower. The index is up another 41 cents to $73.12 (as of Feb. 1) and is now 27 cents above last year at this time. February futures, which expire Feb. 14, finished last Friday at a $2.33 premium to today’s cash quote. Wholesale pork prices continue to stabilize in the upper $80.00 range, as cutout slipped 19 cents to $88.40 on Friday. Gains in bellies offset losses in most other cuts.
