Ahead of the Open | December 12, 2023
GRAIN CALLS
Corn: 1 to 2 cents higher.
Soybeans: 1 to 2 cents lower.
Wheat: 2 to 4 cents higher.
GENERAL COMMENTS: Corn and wheat posted corrective gains overnight, while soybeans failed to hold earlier strength amid light profit-talking. Key today will be whether corn and wheat can sustain corrective buyer interest and if buyers show up under the market for soybeans. Outside markets are mixed, with crude oil around 85 cents lower and the U.S. dollar index nearly 200 points lower.
USDA reported daily soybean sales totaling 198,000 MT to unknown destinations for 2023-24.
Crop consultant Dr. Michael Cordonnier left his Brazilian soybean crop estimate at 157 MMT, though he believes “there is a definite downside risk,” especially if rains remain erratic. Cordonnier left his Brazilian corn crop estimate at 118 MMT as he awaits more information about safrinha corn acreage, which is likely to fall more than the 4.5% forecast by Conab last week. Cordonnier left his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn, though he has a differing bias – neutral/higher for soybeans and neutral/lower for corn.
World Weather Inc. says center-south, center-west and northeastern Brazil will experienced net drying over the next week, but rain in the following week should offer some welcome relief from moisture stress in the driest areas. Conditions are expected to be mostly favorable across southern Brazil and most of Argentina’s main crop areas.
Argentina on Monday suspended its registry where companies exporting grains officially report trades “until further notice,” the CIARA-CEC grains chamber said. The suspension came ahead of new President Javier Milei’s announcement of economic measures, which he is scheduled to release today. Milei is expected to unveil fiscal adjustments, reductions in social spending and a potential devaluation of the Argentine peso.
U.S. HRW wheat areas are forecast to receive beneficial rains tonight into Friday. Rains of 0.50 to 1.50 inches will be common, with 1.50 to 3.00 inches in parts of Texas from the eastern Panhandle to north-central parts of the state and in western Oklahoma, according to World Weather.
Ukraine could harvest its smallest wheat crop in 12 years next summer due to a further drop in planting, Argus Media said. In its initial projection for next year’s crop, Argus estimated Ukrainian wheat production at 20.2 MMT, down from 22.2 MMT this year. That would be well below the five-year average of 25.9 MMT and mark the lowest output since 2012.
CORN: March corn futures posted a modest inside day up on the daily chart overnight following Monday’s weakness. Near-term support extends from Monday’s low at $4.79 3/4 to the Nov. 29 contract low at $4.70 1/2. Near-term resistance is layered from $4.84 to $4.93 3/4.
SOYBEANS: January soybean futures modestly built on Monday’s strong gains during overnight trade, but failed to find sustained buying above the 20- and 100-day moving averages at $13.39 3/4 and $13.41, respectively. Those are near-term resistance, along with the overnight high of $13.44. Near-term support extends from the $13.30 area to the psychological $13.00 mark.
WHEAT: March SRW futures posted modest corrective gains overnight following Monday’s technical breakdown. Bulls have lost momentum and yesterday’s price action suggests sideways-to-lower price action is likely near-term. Support extends from Monday’s low of $6.07 1/4 to the 20-day moving average near $5.98. The 40- and 50-day averages lie within that range. Near-term resistance starts at the 10-day moving average at $6.16 3/4 and extends to the $6.25 area.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone after a strong close on Monday. Futures have posted consecutive days of strong corrective gains, suggesting there may not be as much interest in selling price strength. But the market likely needs to show strength throughout much of this week to convince traders lows are in place. Last week’s cash cattle price averaged $169.94, down $4.51 from the previous week and the lowest level since the end of March. Traders will anticipate the cash market will continue to weaken until futures clearly signal a low has been posted. Wholesale beef prices firmed $2.42 for Choice and $1.64 for Select on Monday. Movement slowed from recent levels over the past week-plus, but packers still sold 134 loads on the day.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid ongoing seasonal weakness in the cash market. The CME lean hog index is down another 83 cents to $67.93 (as of Dec. 8). December hogs finished Monday at a 32-cent premium to the cash index, while February futures fell to a 60.5-cent discount. The pork cutout value only held onto about half of Monday morning’s price strength but still firmed 95 cents, as a $10.86 jump in primal bellies more than offset weakness in all other cuts.
