Ahead of the Open | March 6, 2024
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 1 cent lower to 1 cent higher.
Wheat: SRW 1 to 3 cents lower; HRW 4 to 6 cents lower; HRS 3 to 5 cents lower.
GENERAL COMMENTS: Corn and soybeans saw action on both sides of unchanged overnight, wheat favored the downside though pared losses into the break. Gold prices continue to march higher despite profit taking efforts Tuesday. Front-month crude oil futures turned higher overnight following two consecutive days of selling, while the U.S. dollar index is trading around 275 points lower and near two-week lows.
Rainfall in Argentina is set to become less frequent as the El Nino weather phenomenon subsides, giving way to a drier autumn and the possibility of a La Nina climate pattern, the Buenos Aires Grain Exchange said. El Nino is in its “dissipation stage,” which will “give way to the development of a new state of the climate system,” the exchange said in its monthly climate report. However, impacts from the transition may not happen until after this year’s soybean and corn crops are harvested.
Palm olein imports by China could plunge in 2024 as the most widely used edible oil loses pricing edge over rival soyoil. “If we assume the current palm oil/soyoil spread in both cash and futures forward market stays throughout the year, 2024 olein import could drop to 3.1 MMT from 4.2 MMT in 2023,” Ryan Chen, a director at Cargill Investments (China) Ltd, said at an industry conference in Kuala Lumpur. However, palm oil’s premium over soyoil and sunflower oil is expected to wear off by early May at the latest, as their prices are also expected to rise, industry analyst Thomas Mielke said. Oil World said global palm oil exports are likely to fall 2.5 MMT to 51 MMT in the 2024 crop year.
Federal Reserve Chair Jerome Powell begins two days of testimony to Congress, appearing before the House Financial Services Committee today. Traders and investors will closely scrutinize his comments for clues on when the Fed will start cutting interest rates later this year. We’ll have highlights of his comments in “Evening Report.”
CORN: May corn futures saw limited volatility overnight. Bulls are eyeing resistance at $4.29 1/2, which has brought heavy selling for five consecutive sessions. Additional resistance stands at $4.32 1/4 with little backing until $4.41 1/2. Support stands at $4.24 3/4, $4.21 1/2, then $4.13 1/2.
SOYBEANS: May soybean futures traded on both sides of unchanged overnight. Bulls are targeting downtrend line resistance at $11.53, which has capped gains the last two sessions and coincides with the 10-day moving average. Additional resistance stands at $11.65 3/4. Support comes in at $11.42 1/2 then the contract low at $11.28 1/2.
WHEAT: May SRW futures saw followthrough selling overnight. Downtrend line support at $5.46 will remain an important pivot today, which stems from October, November and February lows. Bulls are seeking to overcome resistance at $5.53 then $5.65, the 10-day moving average. Meanwhile, support stands at $5.46, $5.43 1/2, then $5.34 1/4.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle and feeders are expected to open with a mostly weaker tone as April futures have neared technical resistance, which has capped the upside since Feb. 16. Choppy and sideways price action is likely to continue until a catalyst boosts prices higher, which is most likely to come from the cash market. Cash negotiations have been slow to start this week, with just a small lot trading hands in the southern market at sharply weaker prices from last week’s average, though that wasn’t likely enough to set a price tone for the week. Wholesale beef prices declined on Tuesday as Choice dropped $1.51 to $304.79 and Select fell 30 cents to $294.87. Meanwhile, movement improved to 137 loads, indicating there is strong retailer demand under the market.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on technical buying, as the April contract closed right on uptrend line support stemming from the January low. Traders have actively taken out premiums to the CME lean hog index as cash gains have been erratic, drawing concerns that the index will not see its average rise over the coming month into the April contract’s expiration. The index is up 46 cents to $80.87 today (as of Mar. 4), the largest gain since Feb. 21, which could underpin futures today as well. Wholesale prices slipped Tuesday, as cutout fell $1.39 to $91.43, led by a $10.71 drop in bellies, though movement improved to 301.6 loads.
