Ahead of the Open | February 23, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 5 to 7 cents lower.
Wheat: SRW 3 to 5 cents higher; HRW steady to 2 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn and soybeans gave up early corrective gains overnight, though wheat holds onto marginal gains. Weak export sales across the board helped spur selling pressure this morning. Outside markets were mixed overnight as front-month crude oil futures fell under pressure after scoring fresh for-the-move highs Thursday, while the U.S. dollar index continues to face selling pressure, currently around 125 points lower.
The conflict in the Red Sea escalated Thursday as U.S. forces and a coalition warship intercepted and destroyed six Houthi drones that deemed a threat to coalition vessels. Concurrently, a Houthi missile struck a cargo ship, reportedly owned by the UK, in the Gulf of Aden. Earlier, the Houthis declared a ban on ships linked to Israel, the U.S., and Britain, alleging support for Gaza Palestinians, and have been targeting vessels from these countries since November. While attacks on merchant vessels in the Red Sea have delayed cargo and sent shipping costs higher, soft demand and ample ship availability are muting the impact on inflation, analysts from Moody’s Investor Service said.
Despite a slowdown in the farm economy and rising interest rates, agricultural real estate values remained robust through the end of last year. Reports from Federal Reserve District Surveys indicate the value of nonirrigated cropland surged by up to 10% in certain regions compared to the previous year. While increased financing costs and narrower profit margins for key commodities could potentially dampen farmland values, as of the beginning of 2024, these factors had not significantly impacted land markets.
Export sales for the week ended Feb. 15:
Corn: Net sales of 820,400 MT for 2023-24, down 37% from the previous week and 30% from the four-week average. Increases came primarily for Mexico and Colombia. Sales came in the lower end of expectations of 700,000 MT to 1.5 MMT.
Soybeans: Net sales of 55,900 MT for 2023-24, a marketing year low and down 84% from the previous week and the four-week average. Increases came primarily for China, but most of that increase came from a switch from unknown destinations. Sales were below expectations of 300,000 to 800,000 MT.
Wheat: Net sales of 233,500 MT for 2023-24, down 33% from the previous week and 38% from the four-week average. Increases came primarily for Japan and Mexico. Sales came below expectations of 300,000 to 550,000 MT.
CORN: March corn futures saw corrective gains most of the overnight session though poor export sales encouraged sellers. Bulls are seeking to overcome resistance at $4.10, $4.15, then the 10-day moving average at $4.18. Support comes in at Thursday’s contract low of $4.04 1/4 then the psychological $4.00 mark.
SOYBEANS: March soybean futures continue to lead weakness. Prices made fresh for-the-move lows this morning. Resistance stands at $11.50, $11.60 3/4, then the 10-day moving average at $11.67 3/4. Meanwhile, bulls are seeking to hold support at $11.42 3/4, $11.40, then little backing until $11.25.
WHEAT: March SRW futures continue to show relative strength. Despite heavy selling pressure during yesterday’s session, negating big overnight gains, bulls followed through overnight, pressuring initial resistance at $5.89. The 40-day moving average looms over the market at $5.94 3/4, which capped most gains on Thursday. Support stands at $5.84 1/2, $5.79 3/4, then $5.73 1/4.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, though continued consolidation ahead of this afternoon’s USDA reports is possible, which could limit gains after the open. Cash cattle negotiations remained limited Thursday, with neither packers nor feedlots in a hurry to get anything done. Trade is likely to pick up follow this afternoon’s USDA Cattle on Feed Report – though trade could remain limited as packers have purchased a substantial amount of cattle the last two weeks. Analysts polled by Reuters expect a sharp drop in placements in this afternoon’s report, down 11.6% from a year ago, which would mark the third month in a row with a year-over-year decline. Wholesale beef prices firmed on Thursday, as Choice rose $1.99 to $299.79 and Select firmed $1.35 to $285.81. USDA reported net beef sales of 12,600 MT for 2024, down 25% from the previous week and 34% from the four-week average.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though technical resistance looming over the market could limit gains after the open. Prices have quickly returned to uptrend line support that failed in early February, leading to the subsequent breakdown that lasted until mid-month. That resistance has capped gains all week, with prices breaking above that mark before slipping back below it yesterday afternoon. The CME lean hog index continues to firm, underpinning futures, as it is up another 81 cents to $78.78 (as of Feb. 23), extending the seasonal recovery that started at the beginning of this year. Wholesale pork prices firmed $1.72 to $91.89 Thursday, suggesting the $90.00 mark could act as a floor for cutout. A recovery in bellies led the rebound. USDA reported net pork sales of 28,900 MT for 2024, down 14% from last week’s adjusted figure and 17% from the four-week average. Accumulated exports of pork were adjusted down 19,286 MT to China and 18,878 MT to Mexico for week ended Feb. 8 due to a USDA reporting error.
