Ahead of the Open | February 16, 2024
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: Steady to 2 cents lower.
Wheat: SRW 5 to 7 cents lower; HRW 9 to 11 cents lower; HRS 1 to 3 cents lower.
GENERAL COMMENTS: Corn and soybeans saw corrective buying most of the overnight session, though sellers resurfaced into the break. Wheat futures continue to fall under heavy selling pressure. Outside markets saw increased volatility this morning as producer price inflation (PPI) came in higher than expected in January, rising .3% month-over-month, compared to expectations of .1% gain and a .1% drop in December. That sent bonds sharply lower and rates higher, as interest rate futures are now pricing in the first rate cut in July, a sharp contrast to the cut in March that the market anticipated not long ago. Front-month crude oil futures rallied on the inflation number and erased overnight losses, while the U.S. dollar index is trading over 240 points higher on firming interest rates.
USDA Secretary Tom Vilsack addressed regulations during a session with reporters at USDA’s 100th Outlook Forum near Washington, DC. Vilsack reiterated his stance against focusing farm bill support on larger farmers, citing Census of Agriculture data to support the need for assistance to small- and medium-sized farms. He expressed concerns about potential conflicts between the Securities and Exchange Commission (SEC) climate reporting rule and USDA’s efforts to promote climate-smart commodity practices, advocating for incentives over mandates to achieve climate goals. Vilsack also defended USDA’s regulatory efforts, particularly regarding electronic animal ID tags for cattle and bison, emphasizing their importance in disease outbreak mitigation despite the relatively small cost to ranchers.
Lawmakers, including Democratic Sen. Amy Klobuchar (Minn.) and Tammy Duckworth (Ill.), Republican Sen. John Thune (S.D.) and 40 others, wrote a letter to the Biden administration on Thursday to ensure American farmers can benefit from tax credits aimed at reducing climate-change pollution through the production of lower-emission jet fuel. Their concern centers on the potential revision of the Energy Department’s emissions-measuring method, known as GREET, which could impact the ability of the corn-ethanol industry to claim subsidies. The lawmakers called for the Treasury Department to act by March 1 and ensure the update properly credits practices like regenerative farming and carbon capture, recognizes the contributions of U.S. agriculture in indirect land-use changes and rewards modern practices like precision agriculture that increase per-acre yields.
France’s ag ministry rated 68% of the country’s wheat crop in good or excellent condition as of Feb. 12, unchanged from the previous week but the lowest for this time of year since 2020. Torrential rain last fall and in early winter delayed planting in France and also hampered the establishment of crops, particularly along the west coast.
CORN: March corn futures saw profit taking early but have since turned lower. Resistance stands at $4.22 1/4, the psychological $4.25 mark, then the 10-day moving average at $4.28 1/2. Bulls are seeking to hold support at $4.16 1/2, $4.15 then $4.10.
SOYBEANS: March soybean futures saw some corrective buying overnight, though sellers have since reemerged. Resistance stands at $11.73, backed by the psychological $11.75 mark, then the 10-day moving average at $11.81 3/4. Meanwhile, support stands at $11.60 1/4, then the psychological $11.50 mark.
WHEAT: March SRW futures continue to face heavy selling pressure. Prices are quickly nearing oversold levels on the daily chart. Bulls are targeting resistance at $5.73 1/4, backed by $5.82, then the 10-day moving average at $5.84 1/2. Support stands at $5.60, $5.56 1/4, then the psychological $5.50 mark.
CATTLE: Higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open higher on continued technical strength from Thursday’s strong finish. Cash cattle trade continues to take place near the $180.00 mark, down about $1.00 from last week’s cash average. The four-week streak higher is likely going to come to an end, though cash cattle prices have preformed relatively well given the weakness to start to weak and corresponding selling in futures. The rebound seen in April futures following three consecutive days of weakness could give feedlots confidence to hold out for higher bids, though it is unlikely that early week weakness can be undone to push cash cattle prices higher another week. Wholesale beef prices firmed on Thursday, as Choice cutout rose $1.30 to $295.30 and Select surged $3.97 to $287.99, though both are nearing resistance, which could limit retailer demand. Movement firmed to 134 loads, which was impressive given the surge in prices.
HOGS: Lean hogs are expected to open with a mostly weaker tone as April futures struggle against technical resistance. April futures have returned to the late-January highs that coincide with the uptrend line prices rode higher from the December low, which now marks resistance. This combination is likely to limit buying interest today, though the CME lean hog index rising 52 cents to $75.12 (as of Feb. 14) likely gives bulls confidence weakness earlier this week in the index has come to an end. Wholesale pork prices surged $4.04 to $89.95 on Thursday, led higher by $6.00-plus jumps in both hams and bellies, though all cuts except ribs saw gains. Movement was limited to 242.7 loads. Recently, when cutout nears the $90.00 mark, packers take advantage of higher prices and move considerably more pork, driving prices down. It will be key to see if that trend continues in the next couple of days.
