GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 8 to 15 cents higher.
Wheat: 3 cents lower to 3 cents higher.
GENERAL COMMENTS: Soybean and soymeal futures traded sharply higher on Argentine crop concerns coming out of the extended holiday weekend, while corn followed to the upside and wheat was mostly firmer. The strength from overnight price action will continue during the start of daytime trade, though wheat is likely to have a mixed tone. Outside markets are pulling in opposite directions this morning, with front-month crude oil futures around 50 cents higher and the U.S. dollar index around 150 points higher.
Frost occurred Saturday morning in Argentina’s summer grain and oilseed production areas. “Most of the frost was soft and did not have a big impact on crops, but there may have been a few exceptions,” according to World Weather Inc. Western Cordoba and east-central San Luis took the brunt of the coldest conditions and soybeans were likely impacted more than corn with extreme lows slipping near and slightly below freezing in several areas, but mostly along the western fringes of crop country. South American crop consultant Dr. Michael Cordonnier said, “The extent of the damage from the frost will not be known for several more days, but it certainly is going to hurt the crop.”
Northern Argentina is forecast to get some needed rain this week, while southern areas of the country will remain drier than normal for the next 10 days. Brazil will continue to see waves of rain that will disrupt soybean harvest and safrinha corn planting.
Cordonnier cut his Argentine soybean crop estimate another 2 MMT to 34 MMT. He noted, “Everything that could go wrong with the 2022-23 soybean crop in Argentina did go wrong – from the worst drought in 60 years to record-high temperatures and now light to moderate frost in what is essentially the middle of summer.” Cordonnier left his Argentine corn crop estimate at 43 MMT, indicating “the weekend frost appeared to hurt soybeans more than corn.” He also left his Brazilian crop estimates unchanged at 151 MMT for soybeans and 123 MMT for corn.
Leaders from Russia and Turkey will discuss the Black Sea grain export initiative “in the near future,” though there has been no exact date set, RIA Novosti reported, citing a source familiar with the situation. Last week, Ukrainian officials said they expected a meeting on the grain export deal to occur this week.
The U.S. will closely monitor China to see if it provides Russia with “lethal assistance” in its war with Ukraine, which Washington has warned Beijing against doing. made a secret trip to Kyiv Monday and met with Ukrainian President Volodymyr Zelenskyy ahead of the Feb. 24 anniversary of Russia’s invasion. The trip came during a diplomatic visit to Poland to affirm U.S. support for Ukraine. Biden is scheduled to meet Poland’s President Andrzej Duda on this morning and deliver a speech from Warsaw Castle today. The speech is expected to pledge further support for Ukraine and reinforce the NATO alliance.
CORN: March corn futures pushed above the 5-, 10- and 20-day moving averages overnight. Strong near-term resistance is in the $6.85 to $6.88 3/4 range, which is where buying has dried up on the past four rally attempts. Clearing that level would open the upside to the psychological $7.00 mark. Near-term support extends from the 40-day moving average near $6.73 1/2 to the last reaction low at $6.69 1/4.
SOYBEANS: March soybean futures gapped above the 5- and 10-day moving averages overnight. Near-term resistance is at $15.48 1/2 and then last week’s spike high of $15.55 1/2. Near-term support starts at the overnight gap from $15.36 1/4 to $15.33 1/4.
WHEAT: March SRW wheat futures pivoted around last Friday’s low in light, two-sided trade overnight. Near-term support is at the 20-day moving average at $7.61 and last Friday’s low at $7.59 1/2. The 5- and 10-day averages just above $7.70 are near-term resistance.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open the week with a mostly firmer tone, though we anticipate traders will remain rather cautious buyers despite firming cash cattle prices. Cash cattle averaged $161.17 last week, up $1.55 from the previous week. Given tightening market-ready supplies, traders expect cash cattle to trade higher again this week, though packers are likely to stretch out cash negotiations in hopes of getting feedlots to sell at steady/weaker prices. Active cash trade may not be seen until Friday afternoon – after USDA’s Cattle on Feed Report. Boxed beef prices continued the recent strength on Monday with gains of $1.85 for Choice and $2.16 for Select. Rising wholesale prices have kept packer margins in the black as cash prices have firmed, giving them incentive to actively compete for the tightening supply of market-ready cattle.
HOGS: Lean hog futures are expected to open with a mostly firmer tone. While cash fundamentals continue to strengthen, the bigger-than-normal premiums built into nearby contracts are likely to keep traders rather cautious toward the long side of the market. The CME lean hog index is higher again today, extending the recent string of gains as it continues to climb from the seasonal low. The pork cutout value firmed $5.63 on Monday, as all cut posted strong gains, led by a $25 surge in primal bellies.