GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 5 to 10 cents higher.
Wheat: 1 to 3 cents higher.
GENERAL COMMENTS: Soybeans and soymeal led overnight gains in the grain and soy markets as traders evened positions ahead of USDA’s reports later this morning. Outside markets provided support as crude oil futures firmed and the U.S. dollar index fell. But those markets have come off their overnight highs and lows, respectively, and won’t provide a strong influence for grains this morning. We expect mostly firmer trade in grain and soy futures this morning, though price action is likely to be light.
Traders await USDA’s February Supply & Demand Report at 11 a.m. CT. They expect USDA to report U.S. ending stocks at 1.266 billion bu. for corn (up from 1.242 billion bu. in January), 211 million bu. for soybeans (up from 210 million bu.) and 576 million bu. for wheat (up from 567 million bu.). The bigger focus will be any changes to USDA’s global production forecasts. Traders expect USDA to lower its Argentine corn and soybean crop forecasts, with little change anticipated for the Brazilian projections.
Conab raised its Brazilian soybean crop estimate by 177,000 MT from last month to a record 152.9 MMT. The soybean export forecast for 2022-23 remained at 93.9 MMT. The Brazilian government’s crop estimating agency cut its corn production forecast by 1.319 MMT to 123.7 MMT, citing delays to safrinha corn planting. This was Conab’s first assessment of safrinha production. Despite the lower production estimate, Conab raised its 2022-23 corn export forecast by 2 MMT to 47 MMT.
World Weather Inc says Brazil’s weather looks a little better, especially in Mato Grosso where the frequency and intensity of rainfall will slacken for a while. This will allow for more progress on soybean harvest and safrinha corn planting.
Argentina is forecast to receive rain Monday into Wednesday of next week across many crop areas, which would offer some relief to recent hot and dry weather. World Weather says the rainfall may be greatest in northeastern areas where it has been driest for the longest period of time. Relief will be temporary and frequent follow-up rains will be needed, though not expected.
China’s ag ministry made no adjustments to its 2022-23 supply or usage forecasts for corn, soybeans or cotton this month. Its only change was a modest increase to the edible oil consumption forecast.
CORN: March corn futures traded in a narrow range overnight. Near-term support extends from last week’s low at $6.71 1/2 to the 50-day moving average near $6.65. Near-term resistance extends from the 20-day average at $6.76 1/2 to the January high at $6.88 3/4.
SOYBEANS: March soybean futures traded within Tuesday’s range overnight while rebounding to the 5- and 10-day moving averages just above $15.25. Above that level, resistance extends to the January high at $15.48 1/2. Tuesday’s low at $15.11 is initial support, followed by the 40-day moving average around $15.02 1/2.
WHEAT: March SRW wheat futures traded in a narrow range overnight, finding support at the 20-day moving average but unable to trigger buying above the 10- and 40-day averages. Near-term resistance extends to last week’s high at $7.76 1/2. Near-term support starts at $7.42.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Cattle futures are expected to open with a mostly weaker tone after bearish technical closes yesterday, including a key reversal in the April contract. But barring significant technical-based followthrough selling, the downside should be limited as traders expect firmer cash cattle trade again this week. Packers have been slow to establish this week’s cash cattle bids, suggesting trade will again be pushed deep into the week. While the extended negotiations benefited packers for weeks, that changed last week and feedlots are expected to have the upper hand again when trade eventually turns active. Most sources are expecting the cash market to firm at least another $1 to $2 this week after gaining nearly $3 last week. Wholesale beef prices firmed yesterday, with Choice 15 cents higher and Select up $3.61 on movement of 107 loads. The Choice/Select spread narrowed to $9.39.
HOGS: Lean hog futures are expected to open mostly firmer after rebounding well off session lows on Tuesday, continuing the recent increase in volatility. Fundamental support will come from further signs of a seasonal low in the cash market and a rise in wholesale pork prices on Tuesday. The CME lean hog index is up 22 cents to $73.51 (as of Feb. 6), the eighth gain in the last 10 days. The cash index is now nearly $1.50 off its late-January low. After firming $2.53 on Monday, the pork cutout value dropped $3.06 yesterday, with all cuts lower. Packers have struggled to maintain the cutout above $80.00 but movement on price pullbacks remains strong, signaling solid underlying demand. Packers moved 342.1 loads on Tuesday.