Ahead of the Open | February 27, 2024
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 12 to 14 cents higher.
Wheat: SRW 3 to 5 cents higher; HRW 5 to 7 cents higher; HRS
GENERAL COMMENTS: Soybeans led the way higher overnight as soybeans, corn and wheat each saw gains into the break. Each is nearing 10-day moving average resistance, which will be the first real test of the recent bounces. Outside markets were relatively quiet overnight, as front-month crude oil futures continue to trade largely sideways and the U.S. dollar index is trading near recent lows.
South American crop consultant Dr. Michael Cordonnier kept his Brazilian and Argentine crop estimates unchanged given rains last week and more in the forecast this week. Cordonnier estimates Brazil’s production at 145 MMT for soybeans and 112 MMT for corn. He forecasts Argentina’s production at 50 MMT for soybeans and 54 MMT for corn. He has a neutral to lower bias toward crops in both countries.
State-level winter wheat crop condition ratings released on Monday signaled more general improvement in the HRW crop over the past month. 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 4.9 points from the end of January to 350.2 and stood 26.9 points above USDA’s final national rating at the end of November.
Ukrainian President Volodymyr Zelenskyy said that without new U.S. military aid his country would be unable to defend a Black Sea shipping corridor that has allowed the country to export millions of tons of grain to global markets. “We... created the new route in the Black Sea,” Zelenskiy told CNN in an interview, describing the shipping corridor as a “big success” for so far allowing the export of about 30 MMT of grain and other agricultural products. But he warned that if the U.S. Congress did not approve $60 billion in new security aid then the future of the shipping corridor would be in doubt.
USDA reported daily export sales of 123,000 MT of soybeans for delivery to unknown destinations for the 2023-24 marketing year.
CORN: May corn futures saw continued gains overnight. Initial resistance stands at $4.25, quickly backed by the 10-day moving average at $4.27 1/4. Continued strength sees resistance at $4.29 1/2. Bulls are seeking to hold support at $4.18 1/2, $4.13 1/2, then the contract low at $4.08 3/4. Volume across the curve has been impressive the last three sessions, bulls are seeking a close above meaningful resistance to prove an interim low could be in place.
SOYBEANS: May soybean futures posted impressive gains overnight. Bulls are eyeing the 10-day moving average at $11.65 1/2, backed by $11.75, then the 20-day moving average at $11.84. Meanwhile, support stands at $11.50, under which has triggered a significant amount of dip buying. Further support stands at $11.41 3/4.
WHEAT: May SRW futures saw continued gains overnight. Resistance stands at $5.80 with significant backing from $5.89 1/4. Initial support stands at $5.74 1/2. Bulls regained support stemming from mid-December lows that capped all the downside apart from the mid-February breakdown. That marks significant support at $5.65 1/4.
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone following Monday’s high-range closes. April live cattle futures gapped lower yesterday, though underlying strength prevailed, ultimately closing prices higher on the day. Last week’s cash cattle average jumped $2.60 to $182.95, which was the highest since the first week of November, underpinning futures as well. Despite the recent uptick in wholesale beef prices, packer margins remain deep in the red, which is likely to once again push negotiations late into the week. With fresh contracted supplies becoming available on Friday, negotiated cash trade could be limited. Wholesale beef prices firmed on Monday, as Choice rose $1.18 to $301.79 and Select jumped $1.68 to $287.99.
HOGS: Lean hog futures are expected to open mostly firmer after a late rebound from session lows on Monday, though traders have been hesitant to build premiums to the cash index. While the CME lean hog index is up another 36 cents to $79.46 (as of Feb. 23), April futures finished Monday at a $6.815 premium to today’s cash quote, though the five-year average increase in the cash index from now until mid-April is nearly $7.50. Wholesale pork prices slipped 17 cents to $90.99 on Monday, negating the midsession rally as bellies fell more than $16.00 from their midsession quote. The $90.00 mark has been recent support for cutout, so that level will be key this week.
