Ahead of the Open | December 4, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents lower.
Wheat: SRW 2 to 4 cents higher; HRW 2 to 4 cents lower; HRS 7 to 10 cents lower.
GENERAL COMMENTS: Corn and soybeans favored the downside overnight, with soybeans leading the way lower. Both went into the break well off session lows. Wheat traded higher, continuing to show relative strength. Gold made a record intra-day high overnight, but has since seen sustained selling pressure, along with most risk assets. The recent selling strength in outside markets could limit strength in grains at the open. Front-month crude oil futures are trading modestly lower, while the U.S. dollar index is trading around 250 points higher.
Exporters were busy on Friday, as USDA reported daily sales of 440,000 MT of SRW wheat for delivery to China, 267,044 MT of corn for delivery to Mexico and 183,000 MT of soybean cake and meal for delivery to the Philippines- each during the 2023-24 marketing year.
Due to damage caused by irregular rainfall and heat primarily in Mato Grosso, AgRural cut its Brazilian soybean crop estimate by 4.4 MMT to 159.1 MMT. If the hot and dry conditions persist, the firm says additional cuts to crop size would be likely. AgRural estimated soybean planting was 85% done as of last Thursday, behind 91% on this date last year.
Rain will be erratic and lighter than usual in most of center-west, northeast and northern parts of center-south Brazil over the next 10 days, although completely dry weather is not expected. World Weather Inc. says daily rainfall should be sufficient to slow drying rates and maintain status-quo conditions in the driest areas. Rainfall in the second half of December “may increase” as the dominating high pressure system aloft weakens and begins to dissipate. Regular rains will continue in southern Brazil, leaving some areas too wet. Argentina’s weather will remain mostly favorable, with alternating periods of rain and sunshine.
Canada’s wheat crop is estimated at 32.0 MMT by Statistics Canada, up from the 29.8 MMT forecast in September and higher than the 31.1 MMT traders expected. StatsCan raised its Canadian canola crop estimate to 18.3 MMT, which was right in line with pre-report expectations. While the estimates are higher than previously forecast, Canadian production declined 6.9% from year-ago for wheat and 2.0% for canola.
CORN: March corn futures favored the downside overnight though went into the break nearer session highs. Bulls are looking to break and close prices above the 20-day moving average at $4.85 1/2 for the first time since mid-November, which is backed by $4.90 1/4. Support lies at $4.82 3/4, $4.81 1/4, with firmer backing from $4.78 3/4.
SOYBEANS: January soybean futures gapped lower overnight, though prices went into the break well off session lows. Bulls are looking to break prices above downtrend support at $13.23, which failed overnight. Further strength targets the 200-day moving average at $13.33, while support lies at the overnight low of $13.11 1/4, then the psychological $13.00 mark.
WHEAT: March SRW futures continue to show relative strength, with prices trading at four-week highs overnight. Prices are nearing the downtrend stemming from October and November highs, which will act as initial resistance at $6.11. Persistent strength above this level targets $6.26. Support lies at the psychological $6.00 mark, quickly backed by the 40-day moving average at $5.97, then $5.91.
CATTLE: Lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone as technical selling is likely to persist. February futures failed to overcome initial technical resistance late last week, leading to a fresh bout of selling that is likely to send prices to new for-the-move lows. The rally early last week in futures did not provide strength to the cash market, further entrenching bears’ hold of the market. Wholesale beef prices were mixed on Friday, as Choice fell $1.56 to $297.46 and Select rose 74 cents to $265.49. Dressed weights well above normal will likely keep a lid on wholesale prices in the near term as well, further limiting futures gains.
HOGS: Lean hog futures are expected to open lower in a continuation of Friday’s weakness, led lower by weakening cash fundamentals. The CME lean hog index is down another 77 cents to $70.58 (as of Nov. 30), extending the seasonal price decline. December futures, which expire on Dec. 14 and are cash settled against the index on Dec. 18, finished Friday at a $1.98 discount to today’s cash quote, a narrow discount compared to the persistent weakness seen last week. Wholesale pork prices made a fresh for-the-move low on Friday as well, with cutout falling 28 cents to $83.55.
