Ahead of the Open | January 26, 2024
GRAIN CALLS
Corn: 4 to 6 cents lower.
Soybeans: 11 to 14 cents lower.
Wheat: SRW 6 to 9 cents lower; HRW 6 to 11 cents lower; HRS 7 to 9 cents lower.
GENERAL COMMENTS: The grain and soy markets favored the downside overnight as soybeans continue to lead weakness. The weakness overnight was surprising given relatively quiet outside markets. The U.S. Bureau of Economic Analysis released the monthly personal consumption expenditure price index (PCE) this morning, which showed prices increasing month-over-month, though in line with expectations. Core PCE, the Fed’s preferred measure of inflation, edged .2% higher from .1% higher a month ago, though in line with expectations. The annual core inflation rate slowed for the 11th straight month to 2.9% from 3.2%, the lowest rate since March 2021. Front-month crude oil futures saw mild selling overnight despite the U.S. dollar index being down over 300 points.
USDA reported daily sales of 100,000 MT of soybean cake and meal for delivery to unknown destinations for the 2023-24 marketing year.
More ships carrying grain were diverted from the Suez Canal to sailings around the Cape of Good Hope this week after attacks on vessels in the Red Sea, shipping analysts said. “Another 16 vessels were confirmed diverted this week, taking the total grain cargoes diverted to some 3.9 million tons, up from 3.0 million tons last week, Ishan Bhanu, lead agricultural commodities analyst at data provider Kpler, told Reuters. “Many of the diverted ships are carrying U.S. grain cargoes showing caution with this freight,” Bhanu said. About 7 million metric tons of grain cargoes normally transit the Suez Canal into the Red Sea each month.
Chinese officials have asked their Iranian counterparts to help rein in attacks on ships in the Red Sea by the Iran-backed Houthis, or risk harming business relations with Beijing, four Iranian sources and a diplomat familiar with the matter told Reuters. The discussions about the attacks and trade between China and Iran took place at several recent meetings in Beijing and Tehran, the Iranian sources said. However, the Chinese officials did not make any specific comments or threats about how Beijing’s trading relationship with Iran could be affected if its interests were damaged by Houthi attacks, the Iranian sources said.
Strong export demand and insufficient supply from farmers have pushed up Ukrainian food wheat prices this week, analyst APK-Inform said. It said the prices for second class food wheat had risen by $7.90 to $13.20 per MT versus the previous week, reaching $179.80 to $203.50 per MT CPT (Carriage Paid To). “It is worth noting that even at the highest prices, there were almost no offers,” APK-Inform said.
CORN: March corn futures turned lower overnight. Prices fell below former support at $4.49 3/4, marking that area as initial resistance. Further buying targets the 20-day moving average at $4.55. Bulls are seeking to hold support at $4.47, which capped most of the selling overnight. Additional support lies at $4.45 1/2, then $4.42 1/4.
SOYBEANS: March soybean futures continue to face selling pressure. Bulls are seeking to reclaim the 10-day moving average at $12.28 1/2 with additional resistance at $12.23 on the way. Bears are seeking to break prices below support at $12.05 3/4, $12.05, then the psychological $12.00 mark.
WHEAT: March SRW futures saw renewed selling strength overnight. Bulls are seeking to overcome resistance at $6.12 1/4, $6.17 1/4, then the 100-day moving average at $6.18. Support stands at $6.05 1/2, $6.02, then the psychological $6.00 mark.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open higher on continued technical strength. Cash cattle prices are marching higher as well. After initial trade at $1.00 higher prices on Wednesday, cash cattle traded mostly $2.00 higher yesterday. Sources noted the bulk of the trade was completed in the Southern Plains, while there could still be some cleanup sales in the northern market. The premium that futures hold to cash prices could induce some profit-taking, though continued strength in the cash market should limit selling pressure. Wholesale beef prices were mixed on Thursday, as Choice slipped 82 cents to $298.68 and Select rose 61 cents to $287.85.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though profit-taking could limit gains. Futures have quickly widened premiums to the CME lean hog index, which could limit buying interest after the open. After rising 64 cents on Thursday, the cash index rose another 28 cents to $69.67 today (as of Jan. 24). With just a few weeks until February futures expire, the current premium of $4.63 seems a little wide, especially given the lack of consistency in daily gains in the index. Wholesale pork prices continue to struggle to break above the $90.00 mark. Packers seem to be taking advantage of higher cutout prices, as movement has surged back above the 300.0 loads mark the last couple of days. Cutout rose 5 cents to $88.91 Thursday.
