GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 8 to 12 cents higher.
Wheat: Steady 2 cents higher.
GENERAL COMMENTS: Soybean futures finished the overnight session on the high, while soymeal and soyoil also firmed. Corn followed the soy complex higher, while wheat was mixed overnight. We expect a firmer tone at the start of daytime trade, with support from outside markets. Crude oil futures have moved to strong gains and the U.S. dollar index has given back most of its overnight strength. With much of traders’ attention on positioning ahead of Thursday’s barrage of USDA reports that include the Annual Production Summary, Supply & Demand Report, Winter Wheat Seedings and Quarterly Grain Stocks Report, some corrective selling could surface if early buyer interest is limited. Click here to view the pre-report trade estimates.
USDA reported daily soybean sales of 124,000 MT to unknown destinations for 2022-23.
The overnight U.S. weather model run increased rainfall for central Argentina for midweek next week, but the increase was removed by this morning’s model run and the European model was never onboard with the change. World Weather Inc. says the moisture advertised is not likely to verify and central through southern Argentina will likely remain dry. Northern Argentina is still expecting rain Thursday into Friday, though follow up moisture will be important and not much is expected for a while. World Weather says dry areas of far southern Brazil are expected to receive needed rains in waves over the next week, though more rain will be needed. Excessive moisture in some center-south areas of Brazil is a concern, but lighter rain that is less frequent will occur next week.
Today’s forecast model runs suggest better rain potential in U.S. HRW wheat areas and in a part of West Texas, but these events may be overdone, according to World Weather. Some moisture is expected, but volume in the west-central Plains is likely overdone by the models.
CORN: March corn futures remain in a short-term consolidation range after the technical breakdown the first two days last week. Near-term support is Tuesday’s low at $6.48 1/4, with additional support layered in the $6.45 to $6.35 range. The 10-day moving average at $6.63 3/4 is closely backed by yesterday’s high at $6.64 to form solid initial resistance.
SOYBEANS: March soybean futures inched above the 10-day moving average at $14.96 1/4 at the end of the overnight session. Resistance is layered from the psychological $15.00 mark to the December high at $15.37 1/2. Support is in the $14.90 to $14.65 range.
WHEAT: March SRW wheat posted a downside breakout from the short-term bear flag formation and spiked the December low at $7.23 1/2. Yesterday’s low at $7.20 1/2 is key near-term support. Near-term resistance is at $7.36 and $7.58.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a firmer tone amid expectations the cash market will strengthen this week. But cash negotiations have been slow to develop and Tuesday’s price action signaled traders are likely to remain cautious buyers as they await active cash cattle trade. As a result, choppy price action is likely today. We still anticipate higher cash cattle prices compared with last week’s $157.74 average but active trade may not be seen until Thursday or Friday. Meanwhile, wholesale beef prices dropped on Tuesday, with Choice down $1.71 and Select was $1.27 lower. Packers have struggled to keep Choice beef above $285.00, though dips below that level have attracted a pickup in retailer buying. Packers moved a solid 128 loads of beef on Tuesday’s price drop.
HOGS: Lean hogs expected to face followthrough selling after Tuesday’s low-range close. Fundamental pressure will come from the weakening cash hog market. The CME lean hog index is down another 35 cents to $76.44 (as of Jan. 9) as the seasonal decline continues. February lean hog futures could be headed for a test of the October low at $76.40. The lead contract finished Tuesday $3.36 above today’s cash quote. While that’s small compared to the normal seasonal increase into mid-February, traders will remove more of that premium if the cash index continues to drop. April hogs appear likely to test the November/December double-bottom at $89.10. If that support is violated, a fresh round of sell stops could be uncovered.