GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: Mixed; 2 cents lower to 2 cents higher.
Wheat: Winter wheat 1 cent lower to 1 cent higher. Spring wheat 2 to 4 cents lower.
GENERAL COMMENTS: Soybean and wheat futures posted mixed trade overnight, while corn was mostly weaker. We expect similar price action to start daytime trade. Today marks the flip of the calendar, so fund activity will be closely monitored to kick off the new month. February is also the price discovery period for spring crop insurance prices for corn and soybeans. Outside markets are mildly price-supportive, with crude oil modestly firmer and the U.S. dollar index more than 350 points lower.
The U.S. ag attaché in Argentina slashed its estimate of the country’s soybean crop to 36 MMT, 9.5 MMT below USDA’s official January forecast. The post said “dry weather and high temperatures have damaged the crop.”
Rain will fall in western and southern Argentina today and Thursday followed by a full week of drying. Northeastern areas of the country will be the driest. World Weather says frequent rains this month will be needed to break the country’s drought, but “the second half of February does not look like it will be able to provide such aggressive rainfall.”
Showers and thunderstorms are expected in center-west and center-south Brazil over the next 10 days with most areas getting rain. The frequency and intensity of rainfall is expected to be a little lighter going into the weekend, allowing for some fieldwork to take place, according to World Weather. Rains will increase next week in several areas of the country.
Traders expect USDA this afternoon to report the December soybean crush totaled 188.0 million bu., which would be down from 189.5 million bu. in November and well below the 198.2 million bu. of soybeans processed in December 2021. Soyoil stocks are expected to rise to 2.249 billion pounds.
U.S. corn was offered at the lowest price in Egypt’s tender to buy an unspecified amount of corn. Egypt’s state grain buyer issued its first ever corn tender in January, buying 50,000 MT of Romanian supplies.
CORN: March corn futures dropped below the 10-day moving average at $6.77 3/4 overnight. Next support extends from the 20-day average around $6.70 1/2 to the Jan. 23 low at $6.61 1/4. The 40- and 50-day averages are also within that range. The 5-day average around $6.81 is near-term resistance.
SOYBEANS: March soybean futures traded within Tuesday’s range overnight. Yesterday’s high at $15.43 3/4 is initial resistance, followed by the January high at $15.48 1/2. Near-term support is at the 5-day moving average at $15.29, followed by the 10-day average at $15.14 3/4.
WHEAT: March SRW wheat futures continue to trade in a two-month 80-cent sideways range. Near-term resistance starts at yesterday’s high at $7.66 3/4 and extends to the December high at $7.99. The 5-day moving average near $7.55 is near-term support, followed by the 10-day average around $7.44 1/2.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Mixed.
CATTLE: Cattle futures are expected to open with a firmer tone. Feeder cattle should lead price gains after USDA’s Cattle Inventory Report Tuesday afternoon. USDA estimated the U.S. cattle herd at 89.274 million head as of Jan. 1, down 2.803 million head (3.0%) from last year. The beef cow herd dropped 1.065 million head (3.6%) to 28.918 million head. The 2022 calf crop was estimated at 34.465 million head, down 701,000 head (2.0%) from the previous year. The total cattle herd and last year’s calf crop were the smallest in eight years. The beef cow herd was the smallest since 1962. The number of beef heifers expected to calve in 2023 dropped 171,000 head (5.1%) and total beef replacement heifers declined 318,000 head (5.8%). That was the smallest number of heifers held back for breeding since 2011. Compared to pre-report expectations, the report data is largely neutral. But the underlying data is bullish as the U.S. cattle herd further contracted – and will continue to do so.
HOGS: Lean hog futures are expected to open with a mixed tone this morning as traders continue to wait on clear signs the cash hog market has posted a seasonal low. After four days of modest gains, the CME lean hog index is down 13 cents to ($72.58) as of Jan. 30. Meanwhile the pork cutout value is anchored near the $80.00 level – unable to move much above or below that mark. The pork cutout slipped 3 cents on Tuesday to $80.25. While packers have been unable to move prices up, movement remains solid with 319.8 loads changing hands yesterday.