Ahead of the Open | February 29, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 10 to 13 cents lower.
Wheat: 1 to 3 cents lower.
GENERAL COMMENTS: Soybeans led the grain and soy markets lower overnight as May soybeans trade fresh contract lows. Export sales rebounded for corn and wheat but remain abysmal for soybeans, according to this morning’s report. Outside markets are supportive as front-month crude oil futures are posting modest gains and near recent highs and the U.S. dollar index is trading around 125 points lower. Core PCE inflation for January came in at 0.4% this morning, the most since February 2023, though was in-line with expectations.
Lawmakers reached a short-term spending agreement to prevent a gov’t shutdown, extending funding until March 8 for six agencies (including USDA, Justice, Commerce, Energy, Interior, Transportation and Housing and Urban Development) and until March 22 for the remainder. This continuing resolution provides more time for leaders to negotiate a comprehensive funding deal. While the stopgap spending legislation is expected to receive support from House Democrats and Senate leadership, it may face opposition from conservative Republicans. Both chambers still need to vote on the proposal, which would be the fourth stopgap spending measure passed for fiscal year 2024.
French container shipping giant CMA CGM expects disruptions to commercial shipping to last “months.” CMA CGM has suspended most Red Sea voyages but is still sending some cargoes on a case-by-case basis when French navy escorts were possible. Rival Maersk this week warned Red Sea disruptions could last into the second half of the year.
Export sales for the week ended Feb. 22:
Corn: Net sales of 1.082 MMT for 2023-24, up 32% from the previous week but down 5% from the four-week average. Increases came primarily for China and Japan. Sales came in the upper end of expectations of 600,000 MT to 1.2 MMT.
Soybeans: Net sales of 159,700 MT for 2023-24, up notably from the previous week but down 30% from the four-week average. Increases came primarily for Mexico, with some switches to China and the Netherlands from unknown destinations. Sales were in the lower end of expectations from 100,000 to 600,000 MT.
Wheat: Net sales of 327,300 MT for 2023-24, up 40% from the previous week and 2% from the four-week average. Increases came primarily for Japan, unknown destinations and the Philippines. Sales were in the middle of expectations of 200,000 to 500,000 MT.
CORN: May corn futures saw renewed selling overnight. Bulls are eyeing support turned resistance at $4.27, the 10-day moving average. Additional resistance lies at $4.31 3/4, then $4.34 1/2. Meanwhile, further selling eyes support at $4.23 1/2, $4.18 1/2, then $4.13 1/2.
SOYBEANS: May soybean futures gave up Wednesday’s gains and more overnight. Prices forged a new contract low. Resistance stands at $11.41 3/4, backed by the 10-day moving average at $11.54 1/4. Support comes in at $11.30 1/4, the psychological $11.25 mark, then $11.18 3/4.
WHEAT: May SRW futures saw followthrough selling overnight. Initial resistance stands at $5.77 3/4, the 10-day moving average, which bulls failed to hold as support yesterday. Additional resistance stands at $5.85. Meanwhile, support stands at $5.69, $5.60, then $5.55.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone in continuation of yesterday’s weakness, which saw prices settle near their daily lows. Cash cattle trade has remained minimal thus far this week, as feedlots passed on steady/weaker bids in the Southern Plains on Wednesday, and virtually no negotiations were reported in the northern market. Packers don’t want to raise cash bids again this week given negative margins, while feedlots are in no hurry to move cattle at lower prices. Wholesale beef prices firmed on Wednesday as Choice rose $1.29 to $303.03 and Select jumped $2.54 to $292.94. Movement totaled the most since Feb. 7 at 149 loads. USDA reported net beef sales of 12,200 MT for 2024, down 3% from the previous week and 26% less than the four-week average.
HOGS: Lean hog futures are expected to open with a mostly weaker tone. April futures struggled to hold onto gains after opening higher on Wednesday, settling near session lows. Cash fundamentals are showing signs of weakening. The CME lean hog index is up just 13 cents to $79.91 today (as of Feb. 27), as the seasonal advance has slowed to a crawl the last four days. April lean hog futures hold a $6.09 premium to today’s cash quote and that will be difficult to justify unless gains in the index prove more robust in the coming days. Wholesale pork prices slipped on Wednesday, as cutout fell $1.53 to $90.34, with losses in all cuts except butts and picnics. USDA report net pork sales of 32,400 MT for 2024, up 12% from the previous week but down 11% from the four-week average.
