GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 2 cents lower to 2 cents higher.
Wheat: 1 to 3 cents lower.
GENERAL COMMENTS: Corn and wheat futures faced followthrough selling overnight after losses the past two days. Soybeans traded both sides of unchanged and finished the overnight session with a mixed tone. We expect similar price action on the open this morning, though strong weekly export sales, especially for corn and wheat compared to expectations should limit selling – and may trigger some buyer interest. Outside markets are mixed, with crude oil slightly firmer and the U.S. dollar index more than 400 points higher.
USDA reported daily soybean sales of 220,000 MT to unknown destinations for 2022-23.
Significant rain fell overnight in Argentina from far western Buenos Aires into eastern La Pampa and extreme southern Cordoba. This event produced 0.50 to 1.50 inches of rain with local totals over 2.00 inches and it will advance to the east to impact much of Buenos Aires and a few immediate neighboring areas into Saturday. Rain elsewhere in Argentina may not be as great for nearly a week, but another wave of rains will impact southern Argentina during the middle of next week before a couple of other disturbances bring moisture to the central and north late next week through the following weekend. World Weather Inc. says by the end of the month, most of Argentina will have received significant rain.
Southern Brazil and Paraguay will experience restricted rainfall over the coming week to 10 days, although these areas won’t be totally dry with some beneficial moisture is expected. Routinely occurring rainfall is expected across other areas of Brazil, supporting long term crop development but maintaining some concern over the maturation and harvest of early season soybeans.
Export sales for the week ended Jan. 12:
Corn: Net sales of 1.132 MMT for 2022-23 rose sharply from 717,400 MT the previous week and from the four-week average. Sales easily topped expectations ranging from 250,000 to 800,000 MT.
Soybeans: Net sales of 986,200 MT for 2022-23 improved 38% from the previous week and 48% from the four-week average. China purchased 507,000 MT during the week. Sales were within the range of expectations from 600,000 MT to 1.2 MMT. Exports of 2.066 MMT were up 28% from the previous week and 23% from the four-week average. China took shipment of 1.367 MMT of U.S. soybeans for the week.
Wheat: Net sales of 473,100 MT increased sharply from only 90,800 MT the previous week and were well above the four-week average. Sales topped expectation ranging from 75,000 to 400,000 MT.
CORN: March corn futures gapped lower overnight but found modest buying on the dip below the 100-day average around $6.74 1/2 and filled the gap. The overnight low at $6.73 is initial support, followed by the 10- and 20-day moving averages just above $6.68. Near-term resistance is at the 200-day moving average at $6.78 and the 5-day average near $6.78 1/2.
SOYBEANS: March soybean futures bounced from support at the 10-day moving average at $15.10 1/4 overnight. That level will serve as initial support, followed by the 20-day average around $15.01 1/2. Near-term resistance is the 5-day moving average at $15.25.
WHEAT: March SRW wheat futures remain technically bearish, maintaining the downtrend from the fall highs and trading below the short-term, intermediate and long-term moving averages. Key near-term support is at last week’s low of $7.20 1/2. Initial resistance marked by the 5- and 10-day moving averages is just above $7.40.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open with a mixed tone this morning as traders await active cash cattle trade and finalize positions ahead of this afternoon’s Cattle on Feed Report. USDA is expected to show the feedlot inventory under year-ago for the fourth consecutive month. Based on the pre-report estimates, traders expect the feedlot inventory to fall 3.2% to the lowest Jan. 1 total since 2018. December placements are expected to have dropped 9.0%, with marketings seen at 5.3% under the year-ago level. Nearby live cattle futures tumbled $1 or more Thursday, with the February contract finishing 83 cents below last week’s average cash price. That suggests traders’ attitudes toward the cash market have deteriorated. But feedlots showed no willingness to move cash cattle at lower prices. Active cash trade may not occur until after this afternoon’s report.
USDA reported weekly beef export sales of 17,300 MT for 2023. China was the lead buyer at 4,800 MT. Exports of 15,700 MT were primarily to Japan (5,200 MT), South Korea (3,400 MT), China (1,700 MT), Taiwan (1,600 MT), and Mexico (1,500 MT).
HOGS: Lean hog futures are expected to open under pressure from the persistent drop in the cash hog market. With hog futures short-term oversold, it wouldn’t surprise us if some corrective buying surfaces ahead of the weekend, though the upside will be limited until cash fundamentals signal a seasonal low. The CME lean hog index is down another 57 cents to $73.28 (as of Jan. 18), the lowest level since the first trading session last year and nearly $49 below the August peak. February lean hog futures finished Thursday $3.37 above the cash index, roughly the same premium traders have maintained in the front-month contract recently amid the persistent cash decline. The pork cutout value firmed $1.68 on Thursday and packers moved a strong 467.3 loads on the day.
USDA reported weekly pork export sales of 34,100 MT for 2023. Mexico was the lead buyer at 11,800 MT, while China purchased 4,100 MT. Exports of 31,100 MT were primarily to Mexico (14,800 MT), China (4,100 MT), Japan (3,600 MT), South Korea (2,600 MT), and Canada (2,400 MT).