Ahead of the Open | February 1, 2024
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 13 to 16 cents lower.
Wheat: Winter wheat 5 to 7 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat started off the new month with a fresh round of selling in the overnight session. Outside markets saw corrective price action overnight in the wake of Wednesday’s Federal Reserve interest rate decision, which left rates steady, though maintained a more hawkish tone, implying interest rates may be higher for longer as inflation has remained sticky. Front-month crude oil futures saw corrective buying and the U.S. dollar index continues to trade near recent highs, up over 250 points.
Analysts expect USDA to report December soybean crush totaled 206.5 million bu. in December, according to a Bloomberg survey, which would be the most ever for any month and 19.4 million bu. (10.2%) above last year. Corn-for-ethanol production is expected to total 474.4 million bu., which would be up 19.0 million bu. (4.3%) from November and 48.6 million bu. (11.4%) above last year.
Soybean oil used to produce biofuels in the U.S. held at 1.062 billion lbs. in November, according to the Energy Information Administration. That marked the seventh straight month in which soyoil use for biofuels topped 1 billion lbs., something that hadn’t happened prior to May 2023.
Export sales for the week ended Jan. 25:
Corn: Net sales of 1.207 MMT for 2023-24, up 26% from the previous week and 58% from the four-week average. Increases came primarily for Japan, Mexico and South Korea. Sales came in the upper end of expectations of 800,000 MT to 1.3 MMT.
Soybeans: Net sales of 164,500 MT for 2023-24, a marketing-year low and down 71% from the previous week and 64% from the four-week average. Increases came primarily for Mexico, with China and Egypt switching some prior sales from unknown destinations. Sales fell short of expectations of 500,000 MT to 1.05 MMT.
Wheat: Net sales of 322,500 MT for 2023-24, down 29% from the previous week and 9% from the four-week average. Increases came primarily for the Philippines and Japan. Traders expected sales between 275,000 and 600,000 MT.
USDA reported daily sales of 206,834 MT of soybeans for delivery to Mexico during the 2023-24 marketing year, which could negate some of the pessimism regarding poor weekly sales.
CORN: March corn futures faced steady selling pressure overnight. Bulls are seeking to overcome initial resistance at the 10-day moving average, currently at $4.47 1/4, backed by $4.50, then $4.51 3/4. Meanwhile, support stands at $4.43 1/4, $4.42 1/4, then $4.40 1/4.
SOYBEANS: March soybean futures turned lower, negating Wednesday’s impressive rebound. Bulls are eyeing resistance at $12.19 1/4, which is backed by $12.24. Support stands at $12.06 3/4, $12.05 3/4, then $11.94 1/4.
WHEAT: March SRW futures saw followthrough selling overnight. Resistance stands at $5.96, quickly backed by $6.00, then $6.03 1/2. Bulls are seeking to hold support at $5.87, which is backed by $5.84 1/2, then $5.82.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, as prices continue to consolidate on the daily bar chart. Futures appear to be building momentum for another move. Wednesday afternoon’s Cattle Inventory Report was neutral against expectations, though the underlying data is bullish as the U.S. cattle herd contracted another 1.9% from year-ago and is going to continue to shrink. More report details can be found here. Cash cattle trade has been minimal to start the week as packers push negotiations into the latter half of the week once again. Packer demand is likely to be limited with contracted supplies for February now available, though slaughter running above week and year ago indicate packers will need to be keep securing supplies. Wholesale beef prices declined on Wednesday, as Choice fell $1.53 to $294.54 and Select dropped $2.88 to $284.17. USDA reported net beef sales of 16,700 MT for 2024.
HOGS: Lean hog futures are expected to open with a mostly weaker tone as consolidation is possible from recent gains. Bulls defended a gap lower in April futures Wednesday but still struggled to close prices higher and failed to take out Tuesday’s high. April futures are near-term overbought, giving further reason to believe some consolidation could be healthy for the market. The CME lean hog index’s gains have accelerated in recent days, indicating the premiums held in nearby February futures may not be too wide, especially if the recent strength in the index persist. The index is up another 90 cents to $72.38 (as of Jan. 30), marking a $7.33 gain so far this month, with $2.48 of that rise coming the last three days. Wholesale pork prices dropped 99 cents to $87.56 on Wednesday, with losses in all cuts except bellies. Movement remained firm at 310.9 loads. USDA reported net pork sales of 42,900 MT for 2024, the most for a week since Nov. 2.
