Ahead of the Open | March 12, 2024
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GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 3 to 5 cents higher.
Wheat: SRW 1 cent lower to 1 cent higher; HRW 3 to 5 cents lower; HRS 3 to 5 cents lower.
GENERAL COMMENTS: Corn and wheat saw corrective selling most of the overnight session though pared losses into the break, while soybeans posted modest gains. February core CPI came in hotter than expected this morning, rising 0.4% month-over-month, steady from a month ago though above expectations of 0.3%. The year-over-year figure came in at 3.8%, above expectations of 3.7% though down from January’s reading of 3.9%. That sent bonds lower this morning on expectations that the Fed may have to hold interest rates higher than anticipated. Higher interest rates supported the dollar this morning as well. Front-month crude oil futures posted modest losses.
South American crop consultant Dr. Michael Cordonnier left his Brazilian soybean and corn production estimates at 145 MMT and 112 MMT, respectively, with a neutral to lower bias toward both crops. Cordonnier left his Argentine crop estimates at 50 MMT for soybeans and 54 MMT for corn, with a neutral bias toward both.
Conab cut the official Brazilian soybean crop estimate by 2.5 MMT to 146.9 MMT. It reduced Brazil’s corn crop by 943,000 MT from last month to 112.8 MMT, including a 750,000-MT cut to the safrinha crop estimate. Both remain well below the most recent USDA estimates at 155.0 MMT and 124.0 MMT for soybeans and corn, respectively.
Ukraine’s 2024 combined grain and oilseeds production is likely to shrink to 76.1 MMT from 82.6 MMT last year, Ukrainian grain traders union UGA said. It said production could include 26.3 MMT of corn, 20 MMT of wheat and 13.7 MMT of sunflower seeds. With smaller production, UGA said Ukraine’s exportable grain and oilseed surplus for 2024-25 could decrease to 43.7 MMT from 53.2 MMT in the current marketing year, including 20.5 MMT of corn, 13 MMT of wheat, 4 MMT of soybeans and 3.6 MMT of rapeseed.
CORN: May corn futures saw profit taking overnight. Bulls are seeking to maintain the trend of weak overnight trading that is met with daytime buying. Gains have stalled just shy of 40-day moving average resistance at $4.43 1/4. Further resistance stands at $4.50. Support stands at $4.38, backed by converging 10-day and 20-day moving averages at $4.34 1/2, then Monday’s low of $4.33 1/4.
SOYBEANS: May soybean futures posted modest gains overnight. Bulls are seeking to overcome resistance at $11.84, backed by Monday’s high of $11.89 1/4 then the 40-day moving average at $11.94 1/2. Meanwhile, support stands at $11.75, the 20-day moving average at $11.70 1/2, then $11.65 3/4.
WHEAT: May SRW futures traded in a relatively tight range overnight. Gains stopped shy of 10-day moving average resistance at $5.50 3/4 Monday. Further resistance stands at $5.63. Support comes in at $5.42 3/4, $5.37 3/4, with little backing until $5.28 1/2.
HOGS: Lower.
CATTLE: Live cattle and feeders are expected to open with a mostly firmer tone, as April live cattle futures are supported by technical support. The uptrend line stemming from December lows in April futures has caught up to current prices as price action has been largely sideways for the last three weeks. Prices have tested this uptrend support six times in the last two weeks and it continues to serve solid support. Last week’s cash cattle average was up $1.82 from the previous week at $185.12, the highest weekly mark since Oct. 20 of last year. Packers purchased a strong 76,000 head in the negotiated market last week, including 24,000 head “with time.” Rising wholesale prices have improved packer margins, though they still remain in the red. Choice cutout jumped $1.84 to $308.88 and Select rose $1.45 to $298.88 on Monday, though movement was light at 77 loads.
HOGS: Lean hog futures are expected to open lower on continued technical selling and cash index weakness. The uptrend on the daily bar chart stemming from the January low has been negated and the technical advantage is shifting to bears. A break of the seasonal strength in the CME lean hog index, which is down 7 cents to $81.41 today (as of Mar. 8), confirmed bears’ hypothesis of weakness in the near-term, which could drive further selling. Meanwhile, wholesale pork prices continue to show relative strength. Cutout rose $1.40 to $93.51 on Monday. While that was down from the midsession quote, all cuts still posted gains for the day as grocers are likely stocking up for features as grilling season kicks off in a few weeks.
