Ahead of the Open | January 23, 2024
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 7 to 10 cents higher.
Wheat: SRW 3 to 5 cents higher; HRW 4 to 6 cents higher; HRS 3 to 5 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat pivoted near unchanged most of the overnight session though surged higher into the break. Grains worked higher despite unsupportive outside markets, as front-month crude oil futures reversed Monday’s gains and the U.S. dollar index was modestly higher on higher interest rates.
South American crop consultant Dr. Michael Cordonnier maintains a lower bias toward Brazil’s soybean and corn crops but kept both production estimates unchanged this week at 149 MMT and 115 MMT, respectively. He also kept his Argentine crop estimates at 52 MMT for soybeans and 56 MMT for corn. Cordonnier expects total South American production to rise 9.2% for soybeans and 0.5% for corn versus last year.
Agriculture and Agri-Food Canada’s preliminary projections for the 2024-25 marketing year call for wheat seedings excluding durum to fall 2.9% from last year to 8.2 million hectares due to lower prices and relatively ample global supplies, though that would still be about 5% above the five-year average. With yields expected to recover, assuming normal weather conditions, total wheat production is projected to rise about 1% to 27.9 MMT.
Australia is poised to produce much more wheat and other crops this year than previously thought after rainfall confounded expectations that an El Niño weather pattern would maintain dry and hot conditions, analysts and industry associations told Reuters. The weather turnaround has been striking, with the driest three-month period on record between August and October giving way to what some farmers say is their greenest summer in memory. Australia’s wheat production could reach roughly 30 MMT, according to Ole Houe at IKON Commodities in Sydney, instead of the 24 MMT to 25 MMT crop if weather had remained dry. Commonwealth Bank forecast the wheat harvest at 31.4 MMT.
CORN: March corn futures continued to see corrective gains overnight though still remain within last Friday’s range. Bulls are seeking to overcome resistance at $4.49 1/2 then $4.55. Support stands at $4.47, which was captured overnight, with backing from $4.45 1/2 then $4.42 1/4.
SOYBEANS: March soybean futures overcame $12.25 resistance overnight and are continuing to work higher. Bulls next target is maintaining prices above the 10-day moving average at $12.31 1/2, capturing resistance at $12.36 1/2, then $12.48 1/2. Support stands at $12.25, $12.13 1/4, then $12.05 3/4.
WHEAT: March SRW futures have quietly risen for three consecutive sessions and are working higher once again. Psychological $6.00 resistance capped gains overnight, which is backed by the 40-day moving average at $6.05. Meanwhile, support stands at $5.96 then $5.91 1/4.
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a firmer tone on technical strength. February live cattle have maintained a tight uptrend from the December low and traded near trendline support on Monday’s lows, which underpinned futures in the latter half of the session. When paired with wholesale beef strength, resurgent futures buying is possible. Choice cutout rose $3.17 to $298.67 and Select firmed $3.53 to $286.58 on Monday, though movement dipped to 78 loads, indicating grocers could be more selective as Choice beef nears $300.00. Last week’s cash average was up 29 cents from the prior week at $173.76. While the recent rally in wholesale beef has improved packer margins, they remain in the red, which could push negotiations late in the week once again.
HOGS: Lean hog futures are expected to open with a firmer tone, though prices could continue to consolidate in the bullish pennant pattern, which would limit gains if there isn’t an upside breakout. February futures have been consolidating since their Jan. 11 peak, with both the upside and downside being limited over the period. The CME lean hog index, which rose 34 cents to $68.40 (as of Jan. 19), has shown persistent gains, underpinning futures, though daily gains have not been enough to spark a significant rally. Wholesale pork prices continue to outperform both the index and futures, rising $1.61 on Monday to $90.17, the highest level since Nov. 6. All cuts except butts saw gains, though movement continues to slow from earlier this month.
