Ahead of the Open | February 7, 2024
GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 14 to 16 cents lower.
Wheat: 1 to 3 cents lower.
GENERAL COMMENTS: Corn futures fell to contract lows overnight, leading soybeans and wheat lower as well. Traders await Thursday’s USDA reports, which will give a fresh look into South American crop estimates and U.S. balance sheets. Outside markets were quiet overnight as front-month crude oil futures continued to see corrective buying and the U.S. dollar index was modestly weaker, despite slight gains in interest rates.
Rains of 0.79 to 3.86 inches fell on central areas of Buenos Aires, Argentina, over the past two days, the best rainfall for this area since late last year. Other key crop production areas of Argentina remained dry, but World Weather Inc. says two waves of rain will move across the country over the next week, bringing widespread relief from the recent hot and dry conditions.
House Ag Committee Ranking Member David Scott (D-Ga.) and Committee Democrats released a memo outlining the essential principles the next farm bill should encompass to garner the backing of the House Democratic Caucus. The members stressed these principles focus on safeguarding historic climate investments and the Supplemental Nutrition Assistance Program (SNAP), a clear signal to Republicans who want to alter some of these programs. The Democratic principles assert that a strong, effective and bipartisan farm bill must address key objectives such as reducing hunger, supporting farmers, investing in sustainable agriculture, revitalizing rural America, lowering costs for farmers and families, promoting equity and supporting renewable and bioenergy initiatives. Comments: The partisan nature of this farm bill continues in both the House and Senate where conflicting issues over funding and farm bill policy matters have both chambers in a virtual holding pattern. The issuance of principles and “creative” ideas are what usually come near the beginning of a farm bill process, not when it should have been concluded already.
The National Corn Growers Association (NCGA) is urging the Biden administration to prioritize biofuels over electric vehicles (EVs) to reduce vehicle emissions. In a letter to President Joe Biden, NCGA emphasized the immediate climate benefits of biofuels, such as corn ethanol, and cautioned that focusing solely on EVs could limit the administration’s ability to lower greenhouse gas emissions. The American Petroleum Institute (API) has joined forces with NCGA to support bipartisan legislation allowing year-round sales of E15 ethanol blends. This collaboration represents a significant shift in energy lobbying, as both groups aim to combat the rise of EVs.
CORN: March corn futures fell to fresh contract lows overnight. Bulls are seeking to overcome resistance at $4.36 1/2, $4.38 3/4 then the 10-day moving average at $4.42 3/4 on corrective buying. Meanwhile, support comes in at $4.33 1/2, $4.30 then the psychological $4.25 mark.
SOYBEANS: March soybean futures saw renewed selling strength overnight. Initial resistance stands at $11.88 1/2, backed by the 10-day moving average at $12.03 1/2, which capped Tuesday’s gains. Support stands at $11.79 1/2, $11.76 then $11.59 3/4.
WHEAT: March SRW futures saw moderate losses overnight as price action continues to tighten on the daily bar chart. Initial resistance stands at $5.96 3/4, quickly backed by $5.98 then $6.02 1/2. Support comes in at $5.90 1/2, $5.86 3/4 then $5.84 1/2.
CATTLE: Higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open higher on followthrough buying. Cattle futures surged on Tuesday to fresh three-month highs with buying persistent throughout the session. That likely gave feedlots confidence to hold out for higher packer bids, though packers will be reluctant to bid considering their negative margins. Wholesale beef prices seem to have stabilized near $294.00, stalling the slide from the Jan. 23 peak. Choice cutout rose 59 cents to $294.07 Tuesday while Select rose 83 cents to $284.60. Movement remained fairly light at 107 loads.
HOGS: Lean hog futures are expected to open with a mostly weaker tone as prices are breaking down technically. February futures are now trading at a 38.5 cent discount to the CME lean hog index, indicating traders are anticipating a downturn in cash prices in the coming week. The index is up another 30 cents to $73.86 (as of Feb. 5), while February futures settled at $73.475 on Tuesday. A downturn in the index is likely to encourage selling in deferred contracts as well, though premiums have been greatly reduced from last week’s peak. Wholesale pork prices slipped on Tuesday, led lower once again by bellies. Cutout fell $1.37 to $86.23, though movement totaled an impressive 360.8 loads.
