Ahead of the Open | January 22, 2024
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: Steady to two cents lower.
Wheat: Winter wheat 4 to 6 cents lower; HRS 1 to 3 cents lower.
GENERAL COMMENTS: Corn and soybeans each pivoted around unchanged most of the overnight session and went into the break near unchanged while wheat futures favored the downside. Outside markets were supportive, as front-month crude oil futures saw modest gains and the U.S. dollar index continues to face resistance at recent highs.
Brazil’s weekend rainfall was greatest from Mato Grosso to southern Minas Gerais, Sao Paulo and Parana where sufficient amounts of rain fell in many areas to maintain favorable crop development. Rainfall during the next two weeks will be most concentrated on center-west, northern center-south and northeastern parts of the country. Portions of Rio Grande do Sul, along with a portion of Sao Paulo and southwestern Minas Gerais, will continue drier than usual through the coming week. Argentina was mostly dry during the weekend and that trend will continue for at least one more week, though rainfall may increase next week.
Brazil’s soybean harvest advanced to 6% done as of last Thursday, according to AgRural, paced by Mato Grosso and Paraná. It noted, “The low yields coming from harvest reports are not surprising in Mato Grosso, as the state was the most affected by the drought this harvest. In Paraná, yields slightly lower than initially expected cause disappointment in the state, where the heat and irregular rainfall have affected crops in the final stretch of the grain filling phase.” AgRural estimated safrinha corn planting reached 4.9% done, ahead of last year’s 1%.
China’s soybean imports from Brazil in 2023 jumped 29% from the prior year to 69.95 MMT. Imports from the U.S. fell 13% to 24.17 MMT. Brazil’s market share grew to 70%, while the U.S. share shrank to 24%. China’s soybean imports in the first quarter are forecast to slow by about 20% from a year earlier to 18.5 MMT, according to a Reuters survey, after a record slaughter shrank pig herds. Exports from Argentina are expected to jump in 2024 amid forecasts for a rebound in its soybean crop from drought, which could bring further competition to U.S. soybeans.
CORN: March corn futures struggled to gain much momentum either way overnight. Bulls are looking to overcome resistance at $4.47 before targeting the 10-day moving average at $4.50 1/4, then $4.55. If sellers return, support stands at $4.43, $4.42 1/4, then the contract low at $4.36 3/4.
SOYBEANS: March soybean futures pivoted around unchanged most of the night. Bulls are seeking to overcome resistance at $12.17 1/2, $12.25, then the 10-day moving average at $12.29 1/2. Meanwhile, support stands at $12.13 1/4 then $12.05 3/4.
WHEAT: March SRW futures turned lower overnight despite the recent three-day streak of gains. Bulls are seeking to close prices above the 10-day moving average at $5.94 3/4, which capped the recent rally. Further resistance stands at $6.01 1/4, while bears are seeking to take out support at $5.87 1/4 then $5.82.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone. Friday’s USDA Cattle on Feed Report showed on feed numbers, placements and marketings nearly matching pre-report estimates, which will likely have little impact on trading today. Meanwhile, with little cash cattle trade taking place ahead of Friday, last week’s cash average will be mostly dictated by trade taking place after the report. That data will be released mid-morning, so it could have an impact on futures trade, especially considering February futures are trading near par with recent cash cattle trade. Wholesale beef prices saw weakness again on Friday as prices fall from wintry weather driven peaks. Choice cutout fell 79 cents to $295.50 and Select dropped 71 cents to $283.05 on Friday.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though limited gains in the CME lean hog index could limit buying interest. After seeing near 50-cent jumps in back-to-back days last week, today’s rise of 19 cents to $68.06 (as of Jan. 18) is more modest and could urge traders to continue to wait for cash market gains to catch up to futures. The premium February futures hold to the index slipped to $2.69 as of Friday’s close, which could spark buying, especially if cash hog strength resumes in a meaningful way. Wholesale pork prices slipped 17 cents to $88.56 Friday after a string of steady gains and movement slowed ahead of the weekend.
