GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 1 to 3 cents lower.
Wheat: Steady to 3 cents higher.
GENERAL COMMENTS: Corn and wheat futures mildly favored the upside overnight, while soybeans were mildly weaker in light trade. We expect similar price action on the open this morning, though two-sided price action appears likely in rather directionless trade. Outside markets are pulling in opposite directions for the grain and soy markets, with crude oil more than $1 lower an the U.S. dollar index down around 400 points this morning.
South American crop consultant Dr. Michael Cordonnier cut his Brazilian corn crop estimate by 2 MMT to 123 MMT, citing safrinha corn planting delays and the possibility not all intended acres will be seeded. He left his Brazilian soybean crop estimate at 151 MMT, noting early yields in Mato Grosso are “good” and will likely compensate for any potential losses in southern Brazil. Cordonnier cut his Argentine soybean and corn crop estimates by 2 MMT and 1 MMT, respectively, indicating a return of “problematic weather” after temporary relief. He now estimates Argentine production at 36 MMT for soybeans and 43 MMT for corn.
World Weather Inc. says southern Argentina will be dry or mostly dry through the end of this month. Brazil will remain too wet for the next two weeks across Parana, Sao Paulo, southern Minas Gerais and a part of Mato Grosso do Sul. Mato Grosso will see good soybean harvest and safrinha planting weather at times the remainder of this week, but rain will increase during the weekend and next week, again slowing field progress.
Mexico on Monday scrapped a January 2024 deadline to ban GMO corn for animal feed and industrial use but retained plans to prohibit use of the grain for human consumption as well as the herbicide glyphosate. Mexico still plans to revoke and refrain from granting new authorizations for GMO corn for human consumption, which the decree defined as flour, dough or tortillas made from the grain. The ban does not apply to GMO corn used in the industrial manufacturing of products like cosmetics, textiles and paper.
CORN: March corn futures pushed to a two-week high overnight. Near-term resistance stands at the Jan. 31 high at $6.88 1/2 and the January high at $6.88 3/4. Above that, resistance would be at the psychological $7.00 mark. Near-term support is the 5-day moving average at $6.80 1/2 and then the 10- and 20-day averages just below $6.79.
SOYBEANS: March soybean futures chopped around Monday’s closing level while holding in a relatively tight trading range overnight. Monday’s high at $15.55 1/2 is near-term resistance, followed by the contract high at $15.72 1/4. Near-term support extends from the 5-day moving average near $15.33 to the 20-day average at $15.21.
WHEAT: March SRW wheat futures inched above Monday’s high at $7.96 overnight but failed to find sustained buying above that level. Near-term resistance is at the December high at $7.99 and the psychological $8.00 mark. Near-term support is at the 5-day moving average near $7.78 1/2, followed by the Feb. 3 high at $7.76 1/2.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Higher.
CATTLE: Monday’s run to contract highs and high-range closes suggest live cattle futures will open higher on followthrough buying. But we expect choppy trade as traders prepare for what’s likely to be extended cash cattle negotiations. While packers are likely to dig in their heels and the pace of gains is likely to slow after rising $4.37 the past two weeks, cash cattle are expected to trade steady/firmer this week though active trade isn’t expected until Thursday or Friday. Wholesale beef prices firmed on Monday, with Choice boxes up 29 cents and Select $1.92 higher amid solid movement of 116.
HOGS: Lean hog futures are expected to open with a firmer tone on followthrough buying after strong closes on Monday. But the hog market has struggled to generate sustained buyer interest, so choppy trade can’t be ruled out. The CME lean hog index is up 63 cents to $74.64 (as of Feb. 10), marking the eighth straight daily gain and 12 of the last 14 it has firmed. The cash market has not only posted a seasonal low but the rally is picking up steam with today’s rise being the biggest daily gain since Dec. 27. February lean hog futures exit the board today and April will take over at a sizable premium to the cash index. April hogs finished Monday $11.71 above today’s cash quote. The pork cutout value firmed 69 cents yesterday. While wholesale prices gave back some of the strong morning gains, packers were able to keep prices solidly above $80.00 and moved a solid 271 loads on the day.