Ahead of the Open | February 26, 2024
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 2 to 4 cents higher.
Wheat: SRW 4 to 6 cents lower; HRW 2 to 4 cents lower; HRS 1 to 3 cents lower.
GENERAL COMMENTS: Corn futures fell to fresh contract lows overnight, dragging wheat lower as well. Soybeans fell to contract lows though saw corrective buying into the break. Funds continue to be heavy sellers (as of Feb. 20), marking a record net short position in corn. Outside markets were quiet overnight as front-month crude oil futures traded near unchanged and the U.S. dollar index traded around 200 points lower.
Brazil-based consulting firm AgRural cut its Brazilian soybean crop forecast by 2.4 MMT to 147.7 MMT, with reductions mainly in Paraná and Mato Grosso do Sul, which suffered from heat and irregular rains in January and part of February. AgRural noted Brazil’s soybean harvest reached 40% complete as of last Thursday, ahead of 33% on that date last year. It estimated safrinha corn planting at 73% done, ahead of 56% at this time last year.
Kyiv has urged Poland to punish those responsible for spills of a Ukrainian grain cargo at the border over the weekend, Deputy Prime Minister Oleksandr Kubrakov said. Around 160 MT of Ukrainian grain were destroyed at a Polish railway station amid protests in what a senior Ukrainian official said on Sunday was an act of “impunity and irresponsibility.” Polish farmers are protesting what they describe as unfair competition from Ukraine and European Union environment regulations, blocking border crossings with Ukraine and deliberately spilling trains loaded with Ukrainian grain.
The biofuels industry and corn producers await an update of the Energy Department’s GREET model for calculating greenhouse gas emissions. Revisions expected to be unveiled by March 1 will determine whether corn-based ethanol used to make sustainable aviation fuel (SAF) will qualify for tax credits. With both USDA Secretary Tom Vilsack and EPA Administrator Michael Regan at this week’s Commodity Classic where they both appear on Friday, expect them to comment on the announcement, likely putting their spin on the details. Vilsack told ethanol producers last week he’s pushing to ensure they can qualify for tax incentives.
CORN: May corn futures are working lower for the fourth consecutive session. Initial resistance stands at $4.11 3/4, backed by $4.17 then the 10-day moving average at $4.26. Bulls are seeking to hold support at the contract low of $4.10 1/4, $4.06, then $4.00.
SOYBEANS: May soybean futures marked a fresh contract low overnight though have since seen corrective buying. Bulls are eyeing resistance at $11.50, $11.62 1/4, then the 10-day moving average at $11.66 1/2 on continued corrective buying. Meanwhile, support stands at $11.38 1/4, the contact low of $11.35 3/4, then $11.25.
WHEAT: May SRW futures continued Friday’s weakness overnight. Initial resistance stands at $5.69 with backing from the 10-day moving average at $5.77 1/2. Meanwhile, initial support stands at the overnight low of $5.60, with backing from $5.55, then $5.53 1/2.
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone as the market continues to grind higher. Friday’s USDA Cattle on Feed Report was mildly negative against expectations, though the underlying data remains bullish as placements dropped below year ago for the third consecutive month, a trend that will continue. Reports of higher cash cattle trade taking place Friday afternoon are likely to continue to fuel the upward trend in cattle futures, as the recent downtick in the cash cattle average proved to be temporary. Tightening supplies alongside continued strength in wholesale beef prices are likely to justify current premiums held in futures. Choice cutout rose 82 cents to $300.61 while Select firmed 50 cents to $286.31. That marks the highest quote since Jan. 23 for Choice cutout.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though stiff technical resistance may limit gains. April futures continue to butt up against the trendline that capped losses through January, which is now stiff resistance, as prices have recovered from the early February breakdown. The CME lean hog index, which continues to rally seasonally, justified hefty premiums held by April futures last week, though today’s gain of just 32 cents to $79.10 (as of Feb. 22) could limit futures gains after the open. Hog slaughter continues to run hot, above both last week and last year, which could limit the upside in the coming days, though we continue to believe grocers’ features of hams for Easter will offset higher supplies. Wholesale pork prices slipped 73 cents to $91.16 Friday as a $9.36 drop in primal bellies more than offset gains in all other cuts.
