Ahead of the Open | January 11, 2024

GRAIN CALLS

Corn: Steady to 2 cents lower.

Soybeans: Steady to 2 cents higher.

Wheat: Winter wheat 3 to 5 cents lower; HRS 1 to 3 cents lower.

GENERAL COMMENTS: Corn and wheat traded narrowly near unchanged most of the night, while soybeans favored the upside, though pared gains into the break. Outside markets were mixed overnight, as front-month crude oil futures made up Wednesday’s losses and the U.S. dollar index posted gains following this morning’s inflation report. The Bureau of Labor Statistics (BLS) released their monthly Consumer Price Index (CPI) this morning, which showed inflation being more sticky, which could limit buying interest in risk assets after the open.

The BLS reported CPI at 3.4% in Dec. 2023, up from a five-month low of 3.1% in November and above analysts’ expectations at 3.2%. Compared to November, consumer prices went up .3% versus expectations of .2%. Inflation has proved to be stickier than expected, which could limit the Fed’s willingness to cut interest rates as early as the market expects, which sent interest rate futures higher this morning. Prices decreased less than expected in energy costs, while food, shelter and transportation services continue to show strong year-over-year increases.

The Rosario Grain Exchange raised its Argentine 2023-24 corn production forecast by 3 MMT to a record 59 MMT. It raised the country’s soybean crop forecast by 2 MMT to 52 MMT.

China, the top exporter to the U.S. since 2006, likely lost its position to Mexico in the past year. This shift in rankings is a consequence of changing dynamics and tensions between the two largest economies, reshaping global supply chains. We’ll have further details in “Evening Report.”

Export sales for the week ended Jan. 4:

Corn: Net sales of 487,600 MT for 2023-24, up 33% from the previous week but down 52% from the four-week average. Increases came primarily for Colombia and Japan. Sales came in the lower end of expectations of 400,000 MT to 1.0 MMT.

Soybeans: Net sales of 280,400 MT for 2023-24, up 39% from the previous week but down 74% from the four-week average. Increases came primarily for Japan and China. Sales came below expectations of 325,000 to 950,000 MT.

Wheat: Net sales of 128,100 MT for 2023-24, down 3% from the previous week and 77% from the four-week average. Increases were primarily for China. Sales came in below expectations of 200,000 and 450,000 MT.

USDA reported daily sales of 175,000 MT of corn for delivery to Mexico during the 2023-24 marketing year, marking the first flash sale since Dec. 19.

CORN: March corn futures continue to base near initial resistance at $4.59 1/2. Additional resistance lies at $4.63 1/4, then the 20-day moving average at $4.68 1/2. Bulls are seeking to hold support at $4.55 then $4.50 on continued selling.

SOYBEANS: March soybean futures saw corrective gains overnight. Prices struggled against initial resistance at $12.47 1/2. Additional resistance lies at $12.50, then $12.63 3/4. Support stands at $12.35 then $12.25 on resurgent selling.

WHEAT: March SRW futures continue to see choppy trade on a day-to-day basis. Prices failed to overcome resistance at $6.12 1/2 overnight, which is backed by $6.22 3/4. Meanwhile, bulls are looking to protect support at $6.00 1/4 then $5.91 1/4 on further selling pressure.

LIVESTOCK CALLS

CATTLE: Choppy/lower.

HOGS: Choppy/higher.

CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone on continued technical selling pressure. February futures continue to struggle to overcome downward trendline resistance stemming from the September highs. While cash cattle are expected to trade higher for a fourth consecutive week, trade has been slow to develop after plants reduced slaughter runs earlier this week due to the snowstorm. Another winter storm is likely to limit plants’ capacity on Friday, though many are expected to run heightened slaughter runs on Saturday to make up for the weather-shortened week. The temporary drop in production has helped spur wholesale prices higher, as Choice cutout rose another $2.91 to $283.07 and Select rose $4.11 to $266.94. USDA reported net beef sales of 12,200 MT for 2024. Net sales reductions of 900 MT were carried over from 2023.

HOGS: Lean hog futures are expected to open with a mostly firmer tone, continuing late Wednesday price strength. After gapping lower on Wednesday’s open, lean hog futures showed persistent buying throughout the session, ultimately closing higher on the day. That strength was likely supported by continued cash market strength, as the CME lean hog index is up another 63 cents to $66.46 (as of Jan. 9), now up $1.41 from the Jan. 1 low. Traders appear to be gaining more confidence that the cash market has posted a seasonal low, considering they have been regular buyers of intraday weakness in futures. Wholesale pork prices, which rose $2.14 to $86.67 Wednesday, reached the highest level since Nov. 27, which likely helped support the intraday futures rally. USDA reported net pork sales of 23,300 MT for 2024. Net sales reductions of 73,500 MT were carried over from 2023.