Ahead of the Open | December 18, 2023
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: Steady to 2 cents higher.
Wheat: SRW 9 to 11 cents lower; HRW 13 to 15 cents lower; HRS 9 to 11 cents lower.
GENERAL COMMENTS: Corn traded narrowly to the downside overnight, soybeans traded lower early but went into the break nearer session highs, while wheat saw sustained selling pressure. Outside markets are supportive as U.S. stock indices are near the highs for the year. Front-month crude oil futures favored the upside overnight and are nearly $6.00 above last week’s low. The U.S. dollar index is trading around 95 points lower.
The hot and dry conditions that stressed crops in central and northeastern Brazil during the weekend will continue early this week. Rains and cooler temps are expected to move into these areas of the country by midweek and continue periodically over the next 10 days. Mostly favorable conditions are expected across southern Brazil, Argentina, Paraguay and Uruguay during the next 10 days.
Drought in central Brazil is causing farmers to delay fertilizer purchases for the safrinha corn-planting season, executives told Reuters. Also, Brazil’s soybean harvest will be delayed and that will push a portion of safrinha corn planting past the ideal window. As of early December, farmers had purchased only 60% of their estimated fertilizer needs in the safrinha corn-producing states of Parana and Mato Grosso, compared with the normal 80% at this time of year, said a market development director at Oslo-based Yara’s Brazil unit.
Many shipping companies have suspended cargoes through the Red Sea after missile attacks by the Houthis, an Iran-backed Yemeni militant group. The attacks are a mark of the group’s intensifying assaults on the shipping lane. The Houthis claim to target ships heading toward Israel. One-tenth of globally traded seaborne oil transits through the Bab al-Mandeb strait, a narrow waterway between Yemen and the Horn of Africa.
CORN: March corn futures traded in a tight range overnight, as bulls continue to struggle taking out 10-day moving average resistance at $4.82 3/4. Further buying targets $4.84, then $4.87 3/4. Support lies at $4.80, with backing from $4.77 1/2, then $4.74.
SOYBEANS: January soybean futures continue to face resistance at the 10-day moving average, currently at $13.18 3/4, which has capped gains the last three sessions. Further resistance lies at $13.25, while bulls are seeking to hold support at $13.12 then $13.05, which attracted significant buying volume last week.
WHEAT: March SRW futures continue trade in a moderate downtrend from early December highs. Bulls are seeking to recapture the 100-day moving average which was lost overnight, currently at $6.25 3/4. Further resistance lies at $6.30, while support lies at $6.20 1/4, then $6.11 3/4.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, in continuation of Friday’s strength. While futures maintain a three-month downtrend on the daily bar chart, they posted corrective gains last week and Friday’s close on weekly highs indicates likely continued strength. Cash cattle prices falling for the sixth straight week are likely to limit gains seen in futures, as last week’s average is likely to fall at least $2.00 from the prior week, despite the corrective buying in futures. Wholesale beef prices were mixed on Friday, as Choice fell 68 cents to $291.64 and Select rose $2.56 to $260.82.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, continuing last week’s strength. While futures broke out of a steep four-week downtrend, the overarching trend remains bearish and February futures surging to a $4.75 premium to the CME lean hog index, which fell 60 cents to a fresh seasonal low at $67.15 (as of Dec. 14), is likely to keep a lid on futures until the cash market shows significant signs of a seasonal bottom. Wholesale pork prices rose 76 cents to $84.33 Friday, spurred higher by a $9.98 jump in primal bellies.
