Ahead of the Open | February 6, 2024
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 6 to 8 cents higher.
Wheat: SRW 1 to 3 cents higher; HRW steady to 2 cents higher; HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each saw gains overnight with soybeans leading the way higher. Interest rates continue to be the focus in outside markets. Bond futures saw quiet overnight trade following two sessions of heavy selling, leading to higher interest rates, noted by the 10-year treasury yield soaring over 4%. Front-month crude oil futures posted modest corrective gains overnight while the U.S. dollar index traded near unchanged.
South American crop consultant Dr. Michael Cordonnier left his Brazilian crop estimates at 149 MMT for soybeans and 115 MMT for corn, noting a “mixed bag” of weather and ahead of production updates from Conab and USDA on Thursday. Cordonnier also left his Argentine crop estimates at 52 MMT for soybeans and 56 MMT for corn, noting forecast rains for later this week and next week will be critical for maintaining yield potential after recent stress from heat and dryness. He raised his Paraguay soybean crop forecast 500,000 MT to 10.5 MMT. Cordonnier forecasts total South American soybean production will rise 18.8 MMT (9.4%) for soybeans and 900,000 MT (0.5%) for corn.
The Biden administration has sent five senior U.S. Treasury officials to Beijing this week for economic talks that will include China’s “non-market” policies that are adding excess industrial capacity, a Treasury official said. The delegation, led by Treasury Undersecretary for International Affairs Jay Shambaugh, planned to hold frank conversations as part of the U.S-China Economic Working Group about Beijing subsidies the U.S. says encourage overproduction of goods, potentially flooding global markets. Affected industries include electric vehicles. The group will discuss the U.S. and Chinese economic outlooks, investment screening regimes for national security in both countries, and opportunities to cooperate on climate change and debt relief to poor countries, the official said.
Bill Northey, former USDA Undersecretary for Farm Production and Conservation and Iowa Secretary of Agriculture, passed away. Bill was a long-time friend of Pro Farmer and a true champion for agriculture in Iowa and across the country.
CORN: March corn futures posted modest gains overnight. Initial resistance stands at $4.45, quickly backed by $4.47 1/2, which has acted as a pivot for the past three weeks. Further resistance stands at $4.49 3/4. Support stands at $4.42 3/4, $4.40 1/4, then the contract low of $4.36 1/2.
SOYBEANS: March soybean futures led the way higher overnight. Resistance stands at the 10-day moving average at $12.08 1/2, further backed by last week’s high of $12.23. Bulls are seeking to hold support at $11.96 1/4 then $11.88 1/2 on a reversal lower.
WHEAT: March SRW futures saw modest corrective gains overnight. Bulls are seeking to overcome resistance at $5.99 3/4, quickly backed by the 40-day moving average at $6.02 3/4, then $6.09 1/4. Support stands at $5.90 1/4 then $5.85.
HOGS: Lower.
CATTLE: Live cattle futures and feeders are expected to open with a weaker tone, continuing Monday’s weakness. Last week’s average cash cattle price jumped $2.35 from the prior week to $177.79 as packers bought a lot of cattle. That marks a $4.33 gain over the last three weeks. Cash sources expect firmer cash cattle prices again this week as market-ready supplies remain tight. But surging cattle prices and slipping boxed beef quotes have quickly reversed packers margins from the black into the red, which could limit their enthusiasm in bidding for cattle this week. Wholesale beef prices firmed on Monday, though still remain well below a week ago. Choice cutout rose 40 cents to $293.48 and Select rose 30 cents to $283.77, though movement was light at 85 loads.
HOGS: Lean hogs are expected to open with a weaker tone as futures continue to narrow premiums to the cash index. The CME lean hog index continues to rise seasonally, though gains are less robust than a week ago. The index is up another 44 cents to $73.56 (as of Feb. 2). February hogs are now just 84 cents above the latest quote for the index, which could support nearby futures as that contract goes off the board next Wednesday. The April contract is now $8.64 above the index, which could continue to limit bulls’ appetite, especially as index gains have been inconsistent. Wholesale pork prices slipped on Monday, led lower by a $6.49 drop in bellies. Cutout fell 80 cents to $87.60 as movement slipped to 240.82 loads.
