GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 8 to 12 cents lower.
Wheat: 10 to 15 cents lower.
GENERAL COMMENTS: Bears controlled price action in the grain and soybean markets overnight as Chinese economic concerns fueled a pullback from gains late last week. But outside markets are mildly supportive this morning, with crude oil modestly higher and the dollar slightly weaker. That could attract some buyer interest on a lower open in grain and soy futures.
USDA announced daily sales of 119,000 MT of soybeans to unknown destinations and 150,000 MT of corn to Colombia – both for 2022-23.
Rains across eastern Argentina and far southern Brazil will remain limited over the next 10 days to two weeks, according to World Weather Inc. The southwestern half of Argentina is expected to receive some needed rainfall Friday and Saturday. World Weather says a larger rain event for Argentina could come at the end of the month, though confidence is low. Needed rains fell on northern Rio Grande do Sul, Brazil, during the extended weekend but they will provide only temporary relief with more rainfall needed to stop crop stress.
South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate another 2 MMT to 39 MMT, citing lower yield potential and reduced planted area due to the ongoing drought. Cordonnier cut his Argentine corn crop estimate 1 MMT to 44 MMT, noting early planted corn yields will be hurt and plantings of later-seeded corn will be reduced. He also cut his Paraguay soybean crop estimate 1 MMT to 9 MMT amid irregular rains. Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 125 MMT for corn.
Traders expect members of the National Oilseed Processors Association (NOPA) to report they crushed 182.9 million bu. of soybeans in December. That would be up 2.1% from November but 1.9% less than last year and the smallest December crush figure in three years.
China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century as the fourth quarter was hit hard by strict Covid curbs and a weak property market. China’s GDP grew 2.9% in the fourth quarter, down from 2.9% the previous quarter. For 2022, GDP expanded 3.0%, falling well shy of the official target of “around 5.5%” and sharply below 8.4% growth in 2021.
CORN: March corn futures pulled back overnight from the strong gains the final two days last week. Near-term support is at the 5-day moving average near $6.65 1/2 and then the 10-day average around $6.61. Near-term resistance is at the 100-day moving average at $6.74, last Friday’s high at $6.76 3/4 and the 200-day average around $6.78.
SOYBEANS: March soybean futures faced corrective selling overnight after strong gains the final two days last week. Near-term support is at the 5-day moving average at $15.08 1/2, followed by the psychological $15.00 mark. Near-term resistance is last Friday’s high at $15.33 and the December high at $15.37 1/2.
WHEAT: March SRW wheat futures pulled back overnight from the modest corrective gains posted last week. Bears continue to have strong technical control of the market. Key support is last week’s low at $7.20 1/2. Near-term resistance is layered from $7.48 1/2 to $7.58.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy to lower.
CATTLE: Live cattle futures are expected to open with a mixed tone today as traders sort through this week’s cash cattle expectations. Cash cattle averaged $156.78 last week, down 96 cents from the previous week. February live cattle futures finished last Friday at $157.725, a modest 94.5 cent premium over last week’s average cash price. While traders are hopeful for firmer cash trade this week after consecutive weeks of disappointing price action, they will likely be cautious buyers until the cash market gives a clearer signal. Choice boxed beef prices firmed 81 cents on Monday, while Select fell 34 cents. Packers moved 91 loads of product on the day.
HOGS: Lean hogs are expected to open with a mostly weaker tone, though we can’t rule out mild corrective buying with futures short-term oversold. The CME lean hog index is down 66 cents to $74.83 (as of Jan. 12), extending the sharp seasonal price decline. The pork cutout value fell $1.05 on Monday, though packers moved a strong 445.4 loads on the day. Until cash market fundamentals find a seasonal bottom, buyer interest in lean hog futures will remain limited to modest corrective buying and they could face additional selling pressure. February lean hog futures finished last Friday at $78.65, a $3.82 premium to today’s cash index quote.
China’s pork production increased to 55.41 million MMT in 2022, up from 52.96 MMT in 2021 and the highest since 56.71 MMT in 2014.