GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 2 to 4 cents lower.
Wheat: Winter wheat 4 to 8 cents higher; spring wheat steady to 2 cents higher.
GENERAL COMMENTS: Wheat futures firmed late in the overnight session, led by HRW contracts. Corn futures traded narrowly mixed overnight, while soybeans finished weaker. We expect similar price action on the open this morning, with choppy trade is the most likely outcome. Front-month crude oil futures are nearly $1 higher, which could provide support for grain/soy futures. But the U.S. dollar index is around 400 points higher, which is price-negative.
USDA reported daily export sales totaling 111,800 MT of corn to Japan for 2022-23. USDA also reported 200,000 MT of corn sales to Mexico – 100,000 MT each for 2022-23 and 2023-24.
Markets are closely monitoring the U.S./China situation after the U.S. shot down what was believed to be a Chinese spy balloon on Saturday. China said the balloon, and another one spotted over Latin America, were civilian airships that “unintendedly” entered foreign air space and called the situation an “obvious overreaction.” Chinese foreign ministry spokesperson Mao Ning said. “We hope the U.S. will work with China to properly handle our differences, avoid miscalculation and misunderstanding and harming our mutual trust.”
Argentina is expected to be hot and dry this week, which will stress developing corn and soybean crops. Some rain may evolve late in the weekend and early next week, according to World Weather Inc., though any rainfall would likely provide only temporary relief.
Southern Brazil is forecast to remain dry for the next week, while rains will continue to fall on central areas of the country, further delaying soybean harvest and safrinha corn planting.
Brazil’s soybean harvest advanced just four percentage points to 9% complete as of last Thursday, according to AgRural. That was seven points behind the same time last year. Safrinha corn planting advanced to 12%, up seven percentage points on the week, though just half of last year’s pace for the date. AgRural said, “There is still no major concern with the planting window, as producers are able to accelerate planting as soon as weather conditions improve. But the rains need to stop soon.”
Traders will begin preparing for Wednesday’s Supply & Demand Report from USDA. Minor adjustments are expected to the U.S. balance sheets. Focus will be on shifts in usage forecasts for 2022-23, especially for corn as both exports and ethanol use could be lowered. The bigger focus will be any changes to USDA’s global production forecasts and the impact that has on world ending stocks. Traders are expecting USDA to lower its Argentine corn and soybean crop forecasts, with little change anticipated for the Brazilian projections.
CORN: March corn futures traded within last Friday’s range overnight, finding support on a dip below the 20-, 100- and 200-day moving averages in the $6.75 to $6.74 area. Stronger support is in the $6.67 to $6.61 1/4 range, where the 40- and 50-day averages stand, with the lower end of the boundary representing the last reaction low. Near-term resistance is at the 5-day moving average around $6.78 and the 10-day average just above $6.79.
SOYBEANS: March soybean futures drifted lower overnight but failed to find active seller interest below last Friday’s low. The overnight low at $15.22 1/2 is near-term support, with the 10-day moving average near $15.21. Stronger support would be the 20-day average at $15.15. Near-term resistance extends from the overnight high at $15.35 1/2 to the January high at $15.48 1/2.
WHEAT: March SRW wheat futures traded narrowly within last Friday’s range overnight. Last Friday’s high at $7.76 1/2 is near-term resistance. The 10- and 40-day moving averages are near the overnight low at $7.53 1/2 and will provide near-term support.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Cattle futures are expected to open with a firmer tone as traders anticipate cash cattle prices will strengthen this week. Cash cattle prices firmed late Friday, though traders will have to wait until later today to get the official average price from USDA. With packers thought to be short-bought on near-term slaughter needs, traders start the week with bullish hopes for cash trade. After strong gains late last week, nearby live cattle futures reflect bullish cash expectations, which may limit buyer interest today. Wholesale beef prices softened on Friday, with Choice down 36 cents and Select $2.05 lower. The Choice/Select spread widened to $13.13.
HOGS: We expect lean hog futures to open the week with a choppy to firmer tone. Support will come from signs the cash index is working on a seasonal low, though buyer interest could be limited by premiums futures hold to the cash market. The CME lean hog index is up 20 cents to $73.05 (as of Feb. 2) and has now risen six of the past eight sessions. February lean hog futures finished last week nearly $2.00 above the cash index, while the April contract held nearly a $13.50 premium. The pork cutout value fell $2.41 on Friday, as packers continue to see retailer resistance when prices get above $80.00. But movement has stayed solid, signaling good underlying demand.