Ahead of the Open | January 24, 2024
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 3 to 5 cents higher.
Wheat: SRW 6 to 8 cents higher; HRW 4 to 6 cents higher; HRS 4 to 6 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat continue to see corrective gains as soybeans are leading the way higher. Outside markets saw a keen “risk-on” attitude overnight, despite slowing manufacturing seen throughout the eurozone. Front-month crude oil futures are trading near recent highs as the U.S. dollar index is over 750 points lower, pressured lower by sinking interest rates.
The U.S. military carried out more strikes in Yemen early on Wednesday, destroying two Houthi anti-ship missiles that were aimed at the Red Sea and were preparing to launch, the U.S. military said in a statement. The strikes are the latest against the Iran-backed group over its targeting of Red Sea shipping, and followed a larger round of strikes a day earlier. The Houthis, who control the most populous parts of Yemen, have said their attacks are in solidarity with Palestinians as Israel strikes Gaza. The attacks have disrupted global shipping and escalated geopolitical concerns in the Middle East.
Black Sea consulting firm SovEcon raised its 2024 Russian wheat production forecast 900,000 MT to 92.2 MMT, citing favorable weather conditions. At that level, production would be down 600,000 MT (0.6%) from last year’s crop. SovEcon says due to the abundant snow cover, the first significant cold snap of the season this month had minimal impact on the winter crops. SovEcon noted: “Abundant Russian supplies were a big bearish story for the global wheat market in 2023. With an early good crop outlook and almost record-high stocks, there is a chance that it will remain the case in 2024 as well. Typically, the market starts to trade new-crop prospects in the northern hemisphere starting from the end of the first quarter.”
Argentina led global food inflation last year, topping Lebanon and Venezuela. Argentina’s food inflation surged 211%, followed by 193% for Venezuela and 192% for Lebanon. U.S. food prices rose about 5.8% annually last year.
CORN: March corn futures are working higher for the fifth consecutive session, though gains have been minimal on a day to day basis. Bulls are seeking to close prices above the 10-day moving average at $4.49 1/4, which has capped gains in the last two sessions. Further resistance stands at $4.55 3/4. Meanwhile, support stands at $4.47 then $4.42 1/4.
SOYBEANS: March soybean futures continue to see corrective buying. Resistance stands at $12.45, which is backed by $12.52 1/4. Bulls closed prices over the 10-day moving average for the first time since Dec. 18, marking that as initial support at $12.34 1/4. Further support stands at $12.27 1/4.
WHEAT: March SRW futures found buyers once again overnight, despite struggling to maintain gains on Tuesday. Bulls are targeting a close above the 40-day moving average at $6.04 3/4, which capped gains on Tuesday and overnight. Additional resistance lies at $6.10 3/4. Support stands at $5.96 then $5.91 1/4.
CATTLE: Higher.
HOGS: Higher.
CATTLE: Live cattle and feeders are expected to open higher as futures are supported by cash market fundamentals. The methodical uptrend continues in February live cattle as bulls defended trendline support on Tuesday. Rising wholesale prices pushed packer margins into the black, which should give them incentive to more actively bid for market-ready supplies. Cash cattle have yet to meaningfully trade, as negotiations are once again likely to be pushed into the latter half of the week. Wholesale beef prices surged on Tuesday, with Choice cutout surpassing the psychological $300.00 mark. Choice cutout rose $2.99 to $301.66, while Select firmed $1.80 to $288.38. Movement remained light at 100 loads, indicating retailers are continuing to be selective on purchases.
HOGS: Lean hog futures are expected to open higher, continuing Tuesday’s technical breakout. April lean hogs closed at the highest level in two months as prices broke out of the consolidation pattern that capped gains the last couple of weeks. Futures are supported by methodical gains in the CME lean hog index, which is up another 35 cents to $68.75 (as of Jan. 22). Hog slaughter has rebounded from the depressed values seen the last couple of weeks due to holidays and wintry weather, which should continue the improved demand for cash hogs. Wholesale pork prices slipped on Tuesday, as cutout dropped $2.14 to $88.03, with losses seen in all cuts except ribs. Movement surged to 359.9 loads, which indicates packers likely cut prices to move inventory.
