Ahead of the Open | December 19, 2023
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 7 to 10 cents lower.
Wheat: Winter wheat 5 to 7 cents lower; HRS 4 to 6 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each favored the downside overnight, with soybeans leading the way lower. Outside markets are modestly supportive as front-month crude oil futures are showing light strength and the U.S. dollar index is trading around 250 points lower. Soybeans continue to flounder despite Brazilian weather continuing to be dry and warmer that average, though showers are likely the remainder of the week, bringing some relief, World Weather Inc. says.
USDA reported daily sales of 132,000 MT of soybeans to unknown destinations for the 2023-24 marketing year.
Central and northeastern production areas of Brazil faced extreme heat over the past week in combination with the extended dryness, adding to crop stress. As a result, South American crop consultant Dr. Michael Cordonnier cut his Brazilian crop forecasts 2 MMT for soybeans and 1 MMT for corn. He now forecasts Brazilian soybean production at 155 MMT and the corn crop at 117 MMT. Cordonnier raised his Argentine crop estimate 1 MMT to 53 MMT, citing beneficial weather, though left his Argentine bean crop estimate unchanged at 50 MMT.
The U.S. is creating a multinational naval force called Operation Prosperity Guardian to protect merchant ships in the Red Sea, responding to Houthi rebel attacks that have jeopardized the Suez Canal’s crucial role in global trade. This security operation will involve countries such as the UK, Bahrain, France, Norway and others. The Suez Canal has recently become a new focal point in the Israel-Hamas conflict, with global shipping companies being the primary targets. Many major shipping lines, oil producers and cargo owners are rerouting their vessels away from this critical trade corridor, opting for longer voyages around Africa’s Cape of Good Hope.
Turkish President Tayyip Erdogan said he will speak with his Russian counterpart Vladimir Putin soon to urge Moscow to revive the Black Sea grain initiative. Russia on Sunday reiterated it has no desire to restart the deal.
CORN: March corn futures continue in a tight downtrend on the daily bar chart, as prices were supported by downtrend line support at $4.75 1/2 for most of the overnight session. Additional support lies at $4.73 1/2 then the contract low at $4.70 1/2. Resistance stands at $4.79 then downtrend line resistance at $4.81.
SOYBEANS: January soybean futures’ range is tightening on the daily bar chart, with uptrend line support at $13.16 1/2 capping most losses overnight. Additional support lies at Monday’s low of $13.07. Resistance lies at $13.24 1/2 then downtrend line resistance at $13.32 1/2.
WHEAT: March SRW futures saw additional selling pressure overnight, bulls are seeking to hold support at $6.11 1/2, which is backed by the 40-day moving average at $6.08, then last week’s low of $6.02 1/2. Resistance stands at $6.16 3/4 then $6.25 1/2.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone, continuing yesterday afternoon’s weakness. The average cash cattle price fell for the sixth straight week, which was $1.23 lower from the previous week at $168.71, the lowest level since the week ended March 24. Despite holiday-shortened kill schedules in the coming weeks, cash sources believe packers are short-bought on slaughter needs, which could support cash cattle prices this week, especially as futures have strongly rebounded in the last week and a half. Wholesale beef prices were mixed on Monday, as Choice cutout dropped $2.71 to $288.93, while Select rose $2.90 to $263.72. Movement was lighter than the recent average at 102 loads.
HOGS: Lean hog futures are expected to open with a weaker tone, as bulls were unable to follow through on last week’s strength and seasonal weakness persists in the cash market. The CME lean hog index, which fell 56 cents to $66.59 today (as of Dec. 15), is likely to dictate much of the price action in futures over the coming weeks, particularly in the February contract. Despite last week’s futures jump after a one-day uptick in the index, prices have traded closely to the index for the better part of a month and a half, which is likely to continue until there are sure signs of a seasonal bottom. Wholesale pork prices dropped 36 cents to $83.97 despite showing solid gains at midsession yesterday, with picnics giving up most of the midmorning jump and most other cuts showing weakness.
