GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 2 to 5 cents higher.
Wheat: 6 to 12 cents higher.
GENERAL COMMENTS: Corn and wheat futures posted corrective gains overnight, while soybeans traded mostly higher. The soy product markets were mixed with meal lower and soyoil firmer amid spread unwinding. We expect the firmer tone from overnight to carry over to daytime trade, though fund activity ahead of the weekend will play a major roll in how markets close today. Crude oil futures are around $1 higher after Russia said it plans to cut its oil production by around 500,000 barrels a day, though trading well off their overnight highs. The U.S. dollar index is firmer.
Argentina is forecast to receive rains during the weekend and early next week, though today’s forecast models reduced totals and coverage levels in southern areas. Northern areas will be wetter. The rains will provide temporary relief but more are needed given the prolonged drought.
Dry areas of southern Brazil are expected to receive needed rains next week that will help crop development. Partially drier conditions in central Brazil should allow soybean harvest and safrinha corn planting to advance, though both will remain delayed. Rains across central Brazil the next two wekes are expected to be less frequent and intense than has been the case. South American crop consultant Dr. Michael Cordonnier says around two-thirds of Brazil’s safrinha corn will be planted beyond the ideal window of mid-February.
The U.S. has given Mexico until Feb. 14 to respond to a U.S. request to explain the science behind its planned bans on GMO corn and glyphosate herbicide. Earlier this week, we reported Mexico’s Secretary of Economy Raquel Buenrostro said a new decree on Mexico’s GMO corn ban was coming soon, indicating it would allow U.S. GMO corn to be imported if it cleared a scientific sanitary review.
CORN: March corn futures rebounded overnight from a test of the 40-day moving average near $6.69 1/2. That level will be initial support, followed by the 50-day average at $6.65 1/4 and the last reaction low at $6.61 1/4. Near-term resistance is in the $675 1/4 to $6.77 1/2 range where the 5-, 10- and 20-day averages are located.
SOYBEANS: March soybean futures held within Thursday’s range overnight and within the recent consolidation range. Initial support is at the 20-day moving average at $15.19 1/4, with additional support at this week’s low of $15.05 3/4 and the 40-day average at $15.04 1/2. The 10-day average near $15.25 3/4 is initial resistance, with additional resistance layered to the January high at $15.48 1/2.
WHEAT: March SRW wheat futures remain in the sideways range outlined by the Jan. 31 low at $7.42 and last Friday’s high at $7.76 1/2.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open higher on support from strengthening cash cattle prices. Cash cattle trade developed late Thursday, with prices as much as $4 higher in the northern market. Packers dragged out cash cattle negotiations as long as possible, hoping feedlots would sell around steady prices. But feedlots dug in their heels and were rewarded. The sharply higher cash prices should trigger a wave of buying in live cattle futures, which held modest premiums to the cash market on Thursday’s close. Wholesale beef prices also firmed, with Choice up $2.09 and Select 85 cents higher on Thursday. But traders have been rather cautious buyers of cattle futures despite supportive cash fundamentals and the bullish longer-term outlook.
HOGS: Lean hog futures are expected to open higher on support from additional indications the cash market has posted a seasonal low. The CME lean hog index is up 5 cents to $73.80 (as of Feb. 8), the sixth straight daily gain and 10 of the last 12 days it has been higher. The index is now $1.69 above its January low. The pork cutout value firmed $1.10 on Thursday and movement increased to 318.2 loads. While firming cash fundamentals are supportive, about the only certainty in the hog market at this time is that volatility will remain high. Bigger-than-normal premiums built into spring- and summer-month futures may be limiting buyer interest. April hogs finished Thursday less than $10 above the cash index, while the June contract held nearly a $28 premium. The five-year average is roughly a $7 rally into mid-April and about a $19 climb to mid-June.