Ahead of the Open | March 5, 2024
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 4 to 6 cents lower.
Wheat: Winter wheat 9 to 11 cents lower; HRS 4 to 6 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw selling pressure overnight, with wheat leading the way lower. Outside markets favored a “risk-off” tone overnight, that saw equities weaker, bonds stronger and precious metals higher, as gold futures near all-time highs. Front-month crude oil futures favored the downside while the U.S. dollar index saw modest gains.
South American crop consultant Dr. Michael Cordonnier maintained his neutral/lower bias toward Brazil’s crops but kept his production estimates at 145 MMT for soybeans and 112 MMT for corn. Cordonnier kept his Argentine crop estimates at 50 MMT for soybeans and 54 MMT for corn, with a neutral bias toward both.
China will sharply expand its budget to stockpile grains and edible oils this year and increase support and policies to boost agricultural production, aimed to improve food security. China will spend 140.63 billion yuan ($19.54 billion) on stockpiling grains, edible oils and “other materials” this year, up 8.1% from a year ago. China also allocated 54.5 billion yuan ($7.57 billion) in subsidies for agricultural insurance premiums, up 18.7% from a year ago. The finance ministry will also increase the minimum purchase price of wheat and expand insurance coverage for rice, wheat and corn nationwide. China’s state planner targeted grain output of more than 650 MMT this year. Beijing will also stabilize meat and dairy production capacity.
President Joe Biden will hold a meeting this afternoon of his Competition Council to announce “new actions to lower costs for hardworking families by fighting corporate rip-offs.” USDA announced the finalization of a new rule called “Inclusive Competition and Market Integrity Under the Packers and Stockyards Act,” aimed at promoting fair competition and preventing discrimination, retaliation, and deception in contract farming. The rule, effective May 6, is part of Biden’s efforts to promote competition in various sectors of the economy, and includes agriculture, establishes clearer standards to govern livestock and poultry markets. It aims to address issues faced by producers and growers due to market consolidation over the past three decades, providing them with better access to economic opportunities.
CORN: May corn futures continue to trade largely sideways. Bulls have been unable to overcome stiff resistance at $4.30, settling right on that mark Monday. Additional resistance stands at $4.33, the 20-day moving average. Continued selling pressure finds support at $4.25, then $4.22, with little backing until $4.13 1/2.
SOYBEANS: May soybean futures faced renewed selling pressure overnight. Bulls are eyeing resistance at the 10-day moving average at $11.54 1/4, downtrend line resistance at $11.56, then Monday’s high of $11.65 3/4. Meanwhile, further selling finds support at $11.44 1/2, $11.40 3/4, then the contract low of $11.28 1/2.
WHEAT: May SRW futures gave up Monday’s corrective gains in light overnight trade. Initial resistance stands at $5.64 with backing from the 10-day moving average at $5.69 1/2. Support comes in at the contract low of $5.53, quickly backed by the psychological $5.50 mark, then $5.43 1/2.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle and feeders are expected to open with a mostly firmer tone as April live cattle futures are once again nearing uptrend line support. Technical support and tight market-ready supplies should continue to boost live cattle futures despite largely sideways price action over the past two weeks. The futures market is actively taking out premium to cash prices, though the underlying fundamentals have not changed. Last week’s cash average rose 35 cents to $183.30 while Choice cutout rose $4.67 over the same time frame. Packer margins are improving though they are still in the red. Monday, Choice cutout rose another $1.02 to $306.30 while Select dropped 57 cents to $295.17.
HOGS: Lean hog futures are expected to open with a mostly firmer tone as prices have entered the area that capped losses last week. Traders actively reduced futures’ premiums to the cash index as gains in the cash market have been erratic, which has drawn concerns the index will fall short of the $6.30 gain that historically occurs between now and mid-April. The CME lean hog index is up another 15 cents to $80.41 today (as of Mar. 1). April hogs hold a $5.865 premium to today’s cash quote. Wholesale pork prices pulled back from big gains on Friday, as cutout slipped $1.63 to $92.82, led lower by bellies.
