GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 3 to 5 cents lower.
Wheat: 8 to 12 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat ended lower overnight, with selling pressure mounting late in the session as the U.S. dollar index shot sharply higher after the January employment data. We expect the weak overnight performance to trigger seller interest on the open this morning. Key will be how funds respond to the price weakness, especially in the soybean market, with crop stress in Argentina expected to rebuild after brief relief from recent rains.
USDA reported daily soybean sales of 132,000 MT to unknown destinations for 2023-24.
Argentina will experience hot, dry conditions for the next nine days, with some showers and thunderstorms across part of the country to finish out the second week of the outlook, according to World Weather Inc. Northern areas are advertised to be wettest in the second week of the outlook.
In Brazil, center-west areas will trend wetter this weekend into next week after a few days of welcome “drier” weather. The rains will likely slow crop maturation and field work once again.
Agriculture consultancy IKAR has cut its forecast for Russia’s 2023 wheat crop by 3 MMT to 84 MMT due to weather issues in some areas. SovEcon kept its 2023 Russian wheat crop estimate at 86 MMT, despite “challenging weather in January.”
The UN Food and Agriculture Organization (FAO) global food price index dropped for the tenth straight month in January and was 17.9% below the March 2022 peak. The January decline was driven by a drop in prices of vegoils, dairy and sugar, while cereal grains and meat remained largely stable. Compared to year-ago, prices were up 1.3% for meat, 2.7% for dairy, 4.8% for cereal grains and 2.8% for sugar, while vegoils dropped 24.5%.
Non-farm payrolls jumped 517,000 during January, according to the Labor Department. That was the most since July 2022, whereas traders expected a two-year low of only 185,000 jobs added last month. November and December payrolls were raised a combined 71,000 from previous reports. The unemployment rate dropped to 3.4%, down 0.1 point from the previous month. Average hourly earnings increased 0.3% on a monthly basis and rose 4.4% over the past year. The U.S. dollar index surged following the stronger-than-expected employment data. Fed fund futures now signal about a 50/50 chance the Fed will raise interest rates another two times before pausing.
CORN: March corn futures dropped below the 20-day moving average and fell to the lowest level since Jan. 24 in overnight trade. Next support is at the 40-day moving average at $6.65 3/4, the 50-day average near $6.64 1/2 and the last reaction low at $6.61 1/4.
SOYBEANS: March soybean futures pivoted around the 5-day moving average at $15.32 1/4 overnight. Near-term resistance extends from this week’s high at $15.43 3/4 to the January high at $15.48 1/2. The 10-day moving average at $15.17 1/2 is initial support. Average hourly earnings rose 0.3% on a monthly basis and increased 4.4% over the past year.
WHEAT: March SRW wheat futures held within Thursday’s range overnight, while pivoting around the 5-day moving average. Near-term resistance is at Thursday’s high of $7.70 3/4. Near-term support is at the 10-day moving average near $7.49.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Cattle futures are expected to open higher on followthrough buying after strong gains and a high-range close on Thursday. Yesterday’s explosive gains in live cattle futures and packers’ need for supplies after limited purchase recently, combined with current feedlots, point to higher cash prices. Some sources believe cash priced could rise upwards of $3 by the end of today’s activity. But February live cattle futures could face some profit-taking ahead of the weekend as the lead contract finished Thursday $4.43 above last week’s average cash price. April live cattle posted a contract high yesterday, which places near-term resistance the $164.00 and then $165.00. The all-time high on the continuation chart was posted in 2014 at $171.875. Support is at the old high of $163.575 and then the December high at $162.75.
HOGS: We expect lean hog futures to open higher on followthrough buying after a strong finish on Thursday. But the recent pattern has been back-and-forth, so we can’t rule out price pressure ahead of the weekend. Lean hog futures have held in a sideways range for a couple weeks, though price action has been more volatile the past six sessions. Increased volatility often signals the market trend is about to reverse. In this case, hog futures are working on posting a seasonal low after an extended price decline. The CME lean hog index is up 34 cents, the biggest of the recent gains as the cash index works on a seasonal low, to $72.85 (as of Feb. 1). February lean hog futures finished Thursday $2.50 above today’s cash quote, while April hogs held a $13.15 premium.