Ahead of the Open | February 9, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 6 to 8 cents lower.
Wheat: SRW 4 to 6 cents higher; HRW 1 cent lower to 1 cent higher; HRS steady to 2 cents higher.
GENERAL COMMENTS: Soybeans continue to lead weakness, giving up all of Thursday’s gains overnight, while corn followed to the downside. Wheat futures saw modest corrective gains overnight. Outside markets were relatively quiet overnight, as front-month crude oil futures saw modest gains and the U.S. dollar index is slightly lower. The S&P 500 is set to gap higher to record highs this morning.
Iran-backed Houthi militants are escalating attacks on container ships in the Red Sea, impacting a vital trade route, which historically accounted for about 15% of worldwide shipping traffic. Shipping leader Maersk forecasts disruptions lasting up to a year, with additional costs estimated at $1 million per vessel due to route changes. These delays and expenses raise worries of further price hikes for consumers, already grappling with inflation.
Ukraine expects its 2024 spring seedings area to be the same as last year, though it could be slightly lower in a worst-case scenario, Ag Minister Mykola Solsky told Reuters. Ukrainian farmers seeded a total of 12.75 million hectares of spring crops in 2023, including 4 million hectares of corn, 5.3 million hectares of sunflowers and 1.78 million hectares of soybeans. Solsky said farmers reduced winter wheat seedings due to poor weather last fall, which could cause them to increase the area sown to spring wheat. Ukraine sowed 280,000 hectares of spring wheat last year. Solsky said farmers’ shortage of funds caused by the war and difficulties with exports had forced them to save money and use lower quality wheat seed. While winter wheat has survived the winter so far without serious damage, the quality of this year’s harvest was a potential concern.
In a significant move, 17 Republican Senators on Thursday showed their support in a pending measure for military aid for Ukraine, Israel, and Taiwan, despite intra-party tensions over border security and former President Donald Trump’s opposition. The vote on proceeding to the legislative vehicle for the foreign aid package will be at 6 p.m. CT, at a simple majority threshold. Senate Majority Leader Chuck Schumer (D-N.Y.) then is expected to file cloture on the substitute amendment sometime after the vote this evening. That would set up a cloture vote on Sunday. Without an agreement to speed the process, final passage for the legislation would be sometime early next week, likely by Tuesday, sources signal. The bill’s eventual passage in the Senate is likely, though challenges may arise in the House.
CORN: March corn futures saw followthrough selling overnight. Initial resistance stands at $4.33 1/4, backed by $4.36 1/2 then the 10-day moving average at $4.39 1/4. Meanwhile, bulls are seeking to hold support at $4.29 3/4 then the psychological $4.00 mark.
SOYBEANS: March soybean futures reversed Thursday’s modest strength overnight. Prices have traded in a relatively tight range this week, basing near recent lows. Bulls are targeting resistance at $11.99 1/2 with backing from $12.14 3/4, then $12.22 1/4. Support stands at $11.86 3/4, $11.80, then $11.75.
WHEAT: March SRW futures saw modest corrective gains overnight. Prices fell below initial support at $5.95 3/4, marking that as initial resistance. Additional resistance stands at the psychological $6.00 mark, quickly backed by the 40-day moving average at $6.01 3/4. Support stands at $5.88 1/2 then $5.83.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone, though some profit-taking is possible after the open. April cattle futures continue to march higher on the daily bar chart, marking a fresh for-the-move high on Thursday. Minimal cash cattle trade has taken place this week, as feedlots and packers continue in a standoff, though signs point to higher cash prices. Feedlots appear unwilling to move cattle at steady/weaker prices and packers may need supplies to fill out near-term slaughter runs. Wholesale beef prices continue to stabilize off recent lows as Choice cutout rose 3 cents to $295.01 on Thursday and Select fell $1.30 to $284.12. Packer margins have moderately improved but remain in the red.
HOGS: Lean hog futures are expected to open with a mostly weaker tone as the seasonal rally in the CME lean hog index has stalled. April futures continue to break down technically, though they were supported by moving-average support in the latter half of Thursday’s session. The CME lean hog index is down 2 cents to $74.00 (as of Feb. 7), the first daily decline since Jan. 12 and only the fourth since the beginning of the year. February lean hog futures ended Thursday at a 70-cent discount to today’s cash quote, suggesting traders anticipate cash prices will continue to decline over the next four trading days. Wholesale pork prices surged $2.37 to $86.36 Thursday, led higher by hams, though all cuts except ribs and bellies saw gains. Movement slipped to 268.8 loads.
