Ahead of the Open | February 28, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 1 cent lower to 2 cents higher.
Wheat: SRW 4 to 6 cents lower; HRW 7 to 10 cents lower; HRS 3 to 5 cents lower.
GENERAL COMMENTS: Corn futures showed relative strength overnight, soybeans pivoted near unchanged and wheat gave up a significant portion of Tuesday’s gains. Outside markets were mixed overnight as front-month crude oil futures trade on four-week highs and the U.S. dollar index is trading around 200 points higher, contrary to the recent downward trend.
U.S. biomass-based diesel and ethanol compliance credit prices have slumped to three-year lows on declining feedstock costs and are set to stay low as renewable diesel output rises, the Energy Information Administration (EIA) said. Renewable Identification Numbers (RINs) generated from renewable diesel and biodiesel output (D4) and from ethanol production (D6) are both trading at their lowest since 2020. Declining prices of soybean oil, a widely used feedstock for renewable diesel and biodiesel production, are a primary driver behind the slump in RINs, EIA said. Rising global production and lower demand in China have boosted soybean stockpiles, while increasing exports from Brazil have put more pressure on soyoil prices, the agency noted.
Despite the looming deadlines of March 1 and March 8, congressional negotiators have yet to release the text of a spending agreement for the initial batch that covers around 20% of government funding, including USDA. Talks have continued while the House is on a 12-day recess that ends today. Bottom line: If the House and Senate can’t finish the combination bill by the end of the day Friday, lawmakers will need to pass a stopgap of several days to avoid a weekend shutdown. Thursday is the earliest the initial funding bills could be posted, sources advise. That would put House consideration on Sunday due to the 72-hour rule. That’s two days into a partial shutdown and would push Senate action into next week.
Ukraine’s grain exports through Feb. 27 exceeded last year’s level by almost 12%, reaching 5.3 MMT, according to ag ministry data. Since July 1, 2023-24 grain exports totaled 29.1 MMT, down 2.7 MMT (8.5%) from the same period last year. Ukraine’s 2023-24 grain exports included 15.8 MMT of corn, 11.5 MMT of wheat and 1.6 MMT of barley.
CORN: May corn futures saw mild followthrough strength overnight. Initial resistance stems from the 10-day moving average at $4.26 3/4, which capped gains yesterday. Additional resistance stands at $4.29 1/2, then $4.35. Bulls are seeking to hold support at $4.23, $4.18 1/2, then $4.13 1/2 on resurgent selling.
SOYBEANS: May soybean futures continue to trade near recent lows. Resistance stands at $11.50 then $11.58 1/2, the 10-day moving average, which capped gains Tuesday. Meanwhile, bulls are seeking to hold support at $11.35 3/4 then the contract low of $11.33 1/2. Further backing stands at the psychological $11.25 mark.
WHEAT: May SRW futures gave up a significant portion of Tuesday’s gains overnight. Prices fell below the 10-day moving average overnight, marking $5.80 as initial resistance, which was formerly support. Additional resistance stands at $5.86 3/4. Support stands at $5.75 with backing from $5.69, then $5.59.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, though technical resistance near recent highs might limit gains following the open. Prices continue to trade relatively sideways near recent highs. Cash cattle trade has yet to take place yet this week. Packers have reduced slaughter runs to manage tight market-ready supplies, with this week’s tally estimated to fall as low as 580,000 head. Packer margins remain deep in the red, driving cash cattle trade late into the week and further discouraging slaughter runs. The decrease in production has supported wholesale beef prices, as Choice remains supported by the $300.00 mark and Select is notably above $285.00 – both of which acted as staunch price ceilings recently. Choice cutout fell 5 cents to $301.74 on Tuesday, while Select rose $2.41 to $290.40.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, supported by narrowing premiums to the CME lean hog index. The CME lean hog index is up another 32 cents to $79.78, continuing the seasonal climb. April futures have seen consolidation this week, which has narrowed the premium to the index to $6.12. Technical resistance has encouraged sellers in April futures, though prices are nearing support and are likely to be supported by continued strength in cash fundamentals. Packer margins remain in the black despite strength in the index, as wholesale pork prices continue to show robust strength as demand has remained strong, boosted by grocers willingness to feature pork. Cutout rose 88 cents to $91.87 on Tuesday, fueled by strength in ribs and loins. Movement topped 300 loads for the first time since Feb. 16 at 319.5 loads.
