Ahead of the Open | January 2, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 2 to 4 cents higher.
Wheat: 2 to 5 cents lower.
GENERAL COMMENTS: Grain markets were closed overnight due to the New Year’s holiday and are set to open at 8:30 a.m. CT. A surging U.S. dollar index is likely to pressure both corn and wheat, while falling crop estimates are likely to support soybeans. Outside markets were mixed overnight, as front-month crude oil futures saw corrective buying and the U.S. dollar index rose sharply alongside interest rates.
South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean production forecast by 2 MMT to 151 MMT, citing low yields on early harvested soybeans. Recent rains across central and northeastern areas of the country came too last for early maturing soybeans but will benefit later maturing fields. Cordonnier left his Brazilian corn crop forecast at 117 MMT. He also left his Argentine crop estimates at 50 MMT for soybeans and 53 MMT for corn.
Holiday weekend rainfall was highly variable with some of the greatest amounts in eastern Mato Grosso and western Goias. World Weather Inc. says rainfall is expected to favor northern areas of the country over the next 10 days, while south-central and southern locations will see more sporadic rains. Argentina will be drier this week, which will benefit areas in eastern parts of the country that have been too wet recently.
Iran dispatched a warship to the Red Sea over the holiday weekend after the U.S. Navy destroyed three Houthi boats. White House National Security Spokesperson John Kirby said the U.S. was not seeking a wider conflict in the Middle East or with the Houthis. “We’re going to do what we have to do to protect shipping” he told ABC’s Good Morning America on Sunday, adding the U.S. had “significant national security interests in the region.” Meanwhile, Denmark’s Maersk shipping company will decide today whether to resume sending vessels through the Suez Canal via the Red Sea or redirect them around Africa following a weekend attack on one of its ships.
CORN: March corn futures continue to trend lower on the daily bar chart. Bulls are seeking to overcome resistance at $4.75 1/2 with backing from $4.78 1/4, while support stands at $4.71 then the contract low at $4.68 1/4, which coincides with downtrend line support stemming from May 2023 lows.
SOYBEANS: March soybean futures ended the year with a fresh for-the-move low. Bulls are targeting resistance at $13.01 3/4, $13.11 3/4 then $13.15 1/2 on corrective buying. Support stands at $12.96 3/4 then $12.85.
WHEAT: March SRW futures saw choppy trading last week though favored the upside. Bulls are looking to overcome resistance at $6.36 1/4 then the December high of $6.49 1/2. Meanwhile, support stands at $6.23 1/4, then $6.18.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open mostly higher as prices are nearing the lower end of the recent sideways range. Choppy price action has plagued the futures market throughout the last two weeks of holiday trading despite back-to-back weeks of gains in the cash cattle market. Continued strength in the cash market is likely to support futures prices, though contracted supplies becoming available to packers this week could limit their willingness to actively bid for cattle, while there is a general belief they are short-bought on needs coming out of the holidays. Wholesale beef prices were mixed on Friday, as Choice cutout dropped $1.57 to $289.71 and Select rose $1.09 to $260.33.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on corrective buying. February futures sold off last week as the cash market continues to search for a seasonal low, bringing the premium that futures hold to the CME lean hog cash index to $2.625. Traders seem to anticipate a seasonal low in the index early in the new year, though will likely wait for sustained strength in the index, which fell 22 cents to $65.35 today (as of Dec. 28). It is not unusual for the CME lean hog index to post a seasonal low between Christmas and New Years, so traders will be scrutinizing its movement over the coming days. Wholesale pork prices rose $2.15 on Friday to $84.76, as loins were the only cut to see losses on the day.
