Ahead of the Open | February 20, 2024
GRAIN CALLS
Corn: 4 to 6 cents higher.
Soybeans: 13 to 15 cents higher.
Wheat: SRW 5 to 7 cents higher; HRW 4 to 6 cents higher; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Soybeans continued Friday’s strength overnight, leading corn and wheat to corrective gains as well. Outside markets saw a relatively quiet overnight session following the extended break, as front-month crude oil futures saw modest losses from recent highs and the U.S. dollar index traded around 350 points lower on lower interest rates, which puts the index at the lowest level in a week.
South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate another 2 MMT to 145 MMT, noting later-maturing soybeans will not be able to fully compensate for low yields on early harvested areas. He said soybean yields are generally 10% to 20% below expectations thus far. Cordonnier left his Brazilian corn crop forecast at 112 MMT. While the safrinha corn crop has gotten off to a mostly favorable start, acreage will be down from year-ago and 25% to 30% of the crop will be planted after the ideal window (around Feb. 20), while some forecasts call for a rapid end to the rainy season. Given generally favorable near-term weather forecasts, Cordonnier left his Argentine crop estimates at 50 MMT for soybeans and 54 MMT for corn.
Brazil’s soybean harvest advanced to 32% complete as of last Thursday, according to AgRural. That was eight percentage points ahead of last year at that point. Safrinha corn planting jumped to 59% done, the fastest on record for AgRural’s historical data that began in 2013.
Congress is on an extended Presidents Day holiday recess, even though it has not yet delivered fiscal year (FY) 2024 funding bills. The Senate is out until Feb. 26, while the House will return on Feb. 28. The current continuing resolutions (CR) for FY 2024 March 1 for 20% of the government, including USDA, and on March 8 for the remaining 80%. While some top GOP House leaders say there will not be another CR, others are not so sure. Other lingering issues include border protection and aid to Ukraine, Israel and Taiwan, among other topics. The new farm bill still looks like it is going backward, not forward, with the same issues: 1) funding (need for more money for reference price hikes) and 2) policy issues (conservation, food stamps, tapping the CCC Charter Act and trying to do something to temper the impact of California Proposition 12 and other similar restrictive policies).
USDA reported daily export sales of 155,000 MT of corn for delivery to Japan during the 2024-25 marketing year and 228,000 MT of soybean meal for deliver to the Philippines during the 2023-24 marketing year.
CORN: March corn futures saw corrective gains overnight. Initial resistance stands at Friday’s high of $4.21 1/2, backed by $4.25 then the 10-day moving average at $4.27. Bulls are seeking to hold support at $4.17 3/4, $4.16 1/2 then the contract low at $4.15.
SOYBEANS: March soybean futures saw continued gains overnight. Resistance stands at $11.93 1/2 then the 20-day moving average at $11.97 3/4. Prices overcame initial resistance at the 10-day moving average overnight, which will remain an important pivot at $11.84 1/2, as prices have struggled against that mark since mid-December. $11.83 1/2 marks initial support, with backing from $11.79 1/4, then $11.75.
WHEAT: March SRW futures saw corrective gains overnight. Resistance stands at $5.67, $5.71 3/4 then the 10-day moving average at $5.81 1/4. Support stands at $5.60 1/4, the for-the-move low made overnight at $5.55 1/4, then the psychological $5.50 mark.
HOGS: Choppy/higher.
CATTLE: Live cattle and feeders are expected to open with a firmer tone, continuing their strength from the latter half of last week. Last week’s dip was short-lived as buyers underpinned the market, despite weakness in the cash cattle market. Last week’s 80-cent drop in the cash market is likely to be brief as feedlots will resist moving cattle again at lower prices. Wholesale beef prices firmed on Monday, as Choice cutout rose 89 cents to $297.09 and Select gained 74 cents to $287.40. Movement totaled 105 loads, which is not bad for a holiday Monday.
HOGS: Lean hogs are expected to open with a firmer tone, though futures continue to struggle against the January highs. The CME lean hog index rose 17 cents to $75.29 yesterday (as of Feb. 15) and gains accelerated today, as the index is up another 46 cents to $75.75 (as of Feb. 16). Consistent strength in the index is likely to support futures, though April futures already trading at a $9.475 premium to could leave traders yearning for larger daily gains. Meanwhile, wholesale pork prices surged on Monday, rising $3.21 to $93.78. Primal bellies led cutout higher, jumping $11.16, though all cuts but hams saw gains.
