GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 8 to 12 cents higher.
Wheat: Mixed; 2 cents lower to 2 cents higher.
GENERAL COMMENTS: Soybean futures traded higher overnight and corn followed to the upside. Concerns with Argentine crop production and supportive outside markets fueled followthrough buying. Wheat futures finished with a mixed tone overnight. We expect mostly firmer trade this morning, though trade could be choppy as traders await USDA’s barrage of report data. Crude oil futures are around $1.50 higher this morning and the U.S. dollar index is nearly 800 points lower.
USDA will release its Annual Production Summary, Supply & Demand Report, Winter Wheat Seedings and Quarterly Grain Stocks Report at 11 a.m. CT. With that much data, there are likely to be some surprises, and the markets have a history of big price moves following the barrage of January data. Quarterly grain stocks have been particularly difficult for analysts to peg, especially for corn, and the range of pre-report estimates for Dec. 1 corn stocks is historically wide. Click here to view the pre-report trade estimates.
The Rosario Grain Exchange slashed its Argentine soybean and corn production forecasts as the country faces the worst drought in 60 years. The exchange now estimates the soybean crop at 37 MMT, down 12 MMT from its previous forecast. It cut 10 MMT from its corn crop estimate, which is now 45 MMT. The exchange warned that losses in planting areas, especially late-planted soybeans, could skyrocket and become “massive” without “imminent help” from significant and widespread rainfall. The Buenos Aires Grain Exchange warned it may have to cut its production forecasts for soybeans and corn for the 2022-23 growing season by up to 25% due to a prolonged drought. It said a worst-case scenario for production would be 35.5 MMT for soybeans and 37.8 MMT for corn if drought persists.
Conab lowered its official Brazilian soybean and corn production estimates from last month, citing “poor distribution of rainfall” mainly in Rio Grande do Sul, though it continues to forecast record production for both crops. Conab forecasts Brazilian soybean production at 152.7 MMT, down 765,000 MT from last month. It also cut the 2022-23 corn production forecast by 765,000 MT to 125.1 MMT. Conab cut its 2022-23 soybean export forecast to 93.9 MMT, though that would still be up 15 MMT (19%) from the previous year. Conab left its 2022-23 corn export forecast at 45 MMT, which would be up 3.4% from the previous year.
World Weather Inc. noted overnight and morning weather models didn’t change much for Argentina. Rain is expected in northern areas of the country today and early Friday. Scattered showers and thunderstorms are possible in central areas during the middle of next week and then in the north again late next week. Central and southern crop areas will be driest over the next 10 days.
Brazil weather will remain mixed over the next couple of weeks with some relief from dryness in the far south. Less intensive rain is expected in center-south crop areas, though it will remain wet.
Export sales for the week ended Jan. 5 included:
Corn: Net sales of 255,700 MT for 2022-23 were below pre-report estimates that ranged from 300,000 MT to 1.0 MMT. Exports sales fell 20% from the previous week and were 62% below the four-week average.
Soybeans: Net sales of 717,400 MT for 2022-23 were within the range of pre-report estimates from 500,000 MT to 1.2 MMT. China was the main buyer at 676,600 MT for the week. Sales declined 1% from the previous week and were 41% below the four-week average.
Wheat: Net sales of 90,800 MT were near the low end of pre-report estimates that ranged from 75,000 to 450,000 MT. Export sales increased 93% from the previous week, but were 73% below the four-week average.
CORN: March corn futures remain in a sideways trading range from the December low and high and $6.35 and $6.85, respectively. Near-term resistance is Tuesday’s high at $6.64. Near-term support is Tuesday’s low at $6.48 1/4.
SOYBEANS: March soybean futures pushed above $15.00 and traded as high at $15.07 1/4 overnight. Resistance is layered from $15.08 to the December high at $15.37 1/2. Near-term support extends from the 5-day moving average around $14.92 to the 20-day average at $14.89.
WHEAT: March SRW wheat futures remain technically bearish despite the recovery from Tuesday’s breadown. Near-term resistance is the is at the 10-day moving average at $7.53 and the 20-day average at $7.57 3/4. Tuesday’s low at $7.20 1/2 is key support.
LIVESTOCK CALLS
CATTLE: Choppy.
HOGS: Lower.
CATTLE: Live cattle futures are expected to trade on both sides of unchanged in choppy price action as traders await direction from the cash cattle market. Packers don’t want to pay more than last week for cash cattle, while feedlots are in no hurry to sell at lower prices. Unless either side changes their stance, it appears cash negotiations could extend into Friday. The longer the negotiations extend this week, the more likely the two sides will meet in the middle and prices will be about steady. Choice boxed beef prices fell $3.80 yesterday as packers continue to face retailer resistance when prices reach the mid-$280 range. But there remains solid underlying demand when prices fall into the low-$280 area. USDA reported net beef sales of 13,300 MT for 2023 during the week ended Jan. 5.
HOGS: Lean hogs expected to open lower amid continued weakening cash fundamentals. The CME lean hog index is down another 48 cents to $75.96 (as of Jan. 10), extending its seasonal price slide. The pork cutout value fell $1.05 on Wednesday to $80.68, the lowest level since Feb. 3, 2021. Until cash fundamentals post seasonal lows and start to strengthen, there will be additional downside risk in lean hog futures despite being short-term oversold. USDA reported net pork sales of 13,100 MT for 2023 during the week ended Jan. 5.