Ahead of the Open | December 7, 2023
GRAIN CALLS
Corn: 1 to 2 cents higher.
Soybeans: 5 to 10 cents higher.
Wheat: Winter wheat steady to 2 cents lower; spring wheat steady to 2 cents higher.
GENERAL COMMENTS: Corn and soybeans traded higher overnight in a rebound from the disappointing closes on Wednesday. Winter wheat markets weakened after disappointing weekly export sales data, while spring wheat maintained modest gains amid spreading action. We expect similar trade to start the daytime session. Since it’s been the clear strength of the grain/soy markets recently, key will be whether traders buy modest weakness in SRW wheat or let futures correct their overbought condition. Outside markets are supportive, with front-month crude oil futures up nearly $1.00 this morning, while the U.S. dollar index is more than 400 points lower.
Conab now forecasts Brazil’s soybean crop at 160.18 MMT, down 2.24 MMT from last month. Corn production is estimated at 118.53 MMT, down 538,000 MT from November, including a safrinha crop of 91.24 MMT. Conab uses trendline projections for safrinha corn until February. The government’s crop forecasting agency noted “adverse conditions,” including hot and dry weather in center-west states and excessive rainfall in southern areas, for the cuts.
China imported 7.92 MMT of soybeans in November, up 53.5% from October and 7.8% above year-ago but lower than traders’ expectations due to slower clearing of cargoes at customs. Traders expect soybean imports to jump sharply in December, unless unloading delays at ports worsen. During the first 11 months of this year, China imported 89.63 MMT of soybeans, up 13.3% from the same period last year.
China imported 557,000 MT of meat during November, up 0.9% from October but down 16.4% from last year. Through November, China imported 6.82 MMT of meat, up 1.8% from the same period last year.
USDA reported daily soybean sales of 121,000 MT to unknown destinations for 2023-24.
Export sales for the week ended Nov. 30:
Corn: Net sales of 1.289 MMT for 2023-24, down 33% from the previous week and 17% below the four-week average. China was the buyer of 274,500 MT, including 272,000 MT switched from unknown destinations. Traders expected sales of 725,000 MT to 1.5 MMT.
Soybeans: Net sales of 1.518 MMT for 2023-24, down 20% from the previous week and 21% below the four-week average. China was the lead buyer at 565,200 MT, including 110,000 MT switched from unknown destinations. Traders expected sales of 1.0 MMT to 1.8 MMT.
Wheat: Net sale of 356,400 MT for 2023-24, down 43% from the previous week but up 8% from the four-week average. China was the buyer of 65,000 MT of U.S. wheat, which was switched from unknown destinations. The flurry of daily sales announced to China this week will show up in next week’s report for the week ended Dec. 7. Traders expected sales of 250,000 to 800,000 MT.
CORN: March corn futures rebounded above the 20-day moving average around $4.85 overnight after closing below that level on Wednesday. Key overhead resistance stands at the 50-day moving average near $4.94 after that level halted buying yesterday and helped trigger the price downturn. Resistance is heavily layered from $4.94 to the $5.02 area. Near-term support is in the $4.85 to $4.75 area.
SOYBEANS: January soybean futures have formed a bear flat formation on the daily chart. The contract would need to close above $13.15 1/4 to negate the bearish formation. Resistance is heavily layered from $13.08 to the $13.25 area. The overnight low at $12.92 is near-term support.
WHEAT: March SRW futures remain in the steep uptrend from last week’s contract low but are short-term overbought and due for a pause or pullback. Wednesday’s spike high at $6.49 1/2 is resistance, followed closely by the psychological $6.50 level. Near-term support extends from the 100-day moving average at $6.31 1/2 to the 5-day average t $6.25 1/2.
CATTLE: Lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open lower on followthrough selling after sharp losses and low-range closes on Wednesday. The cattle complex is heavily oversold, but the path of least resistance remains down and funds are in sell mode. If early followthrough selling is limited, futures could attempt a corrective bounce, though there may be fresh sellers on any price strength as cash fundamentals continue to weaken. Cash cattle prices have been mostly $2.00 to $4.00 lower this week. Wholesale Choice beef prices dropped $3.19 on Wednesday and are down $6.47 over the past week, while Select firmed 77 cents. Packers moved a huge 235 loads of product in the spot market, building on the recent surge in retailer buying. USDA reported net beef export sales of 200 MT for 2023, a low for the year, and sales of 18,400 MT for 2024.
HOGS: Lean hog futures are expected to open with a mostly lower tone on pressure from the cattle complex. December hogs could find some buyer interest given their discount to the cash index with just a week until contract expiration. The CME lean hog index is down another 17 cents to $69.43 (as of Dec. 5). December lean hog futures ended Wednesday $1.88 below today’s cash quote, while February hogs held a 13-cent discount. The pork cutout value fell $1.47 on Wednesday as all cuts declined. Movement totaled 353.4 loads. USDA reported net pork export sales of 25,900 MT for 2023, up 23% from the previous week but down 14% from the four-week average. Net sales totaled 10,100 MT for 2024.
