GRAIN CALLS
Corn: 4 to 8 cents lower.
Soybeans: 10 to 20 cents lower.
Wheat: 8 to 12 cents lower.
GENERAL COMMENTS: Soybean and soymeal futures faced active selling pressure overnight, while corn and wheat followed to the downside. Bears will maintain the decided upper hand during early daytime trade. Outside markets are mixed this morning, with front-month crude oil futures around 75 cents higher and the U.S. dollar index more than 100 points higher.
USDA reported daily soybean sales of 192,000 MT to unknown destinations for 2022-23. It’s unlikely this will ease selling pressure seen overnight as focus is on improved weather in Argentina.
Argentina drought relief continued Friday into Saturday with rainfall of 0.60 to 1.50 inches common and local totals of more than 2.00 inches, World Weather Inc. reports. The rains improved topsoil conditions, but much of the country remains quite dry and in need of additional moisture. Argentina will receive additional rains during the next week to 10 days, however, the precipitation this week will be less frequent in the east and far south.
Brazil weather will remain mostly favorable in many areas, but part of center-south areas will remain too wet while portions of Rio Grande do Sul will be too dry.
Brazil-based consulting firm AgRural trimmed its Brazilian soybean crop estimate by 700,000 MT to 152.9 MMT amid cuts to production forecasts in Rio Grande do Sul, Parana and Mato Grosso do Sul, which were partially offset by small increases in other states. The firm lowered its Brazilian corn crop estimate by 400,000 MT to 123.9 MMT given drought stress in Rio Grande do Sul. Both crops would still be record-large. As of last Thursday, AgRural estimated the country’s soybean harvest was 1.8% complete versus 4.7% on this date last year.
China’s markets are closed this week as the country celebrates the Lunar New Year holiday. A focal point during the week will be Covid infections and deaths as numbers spiked ahead of the holiday as Beijing removed most of its restrictions and travelers were allowed to move freely throughout the country. Other Asian markets also will be closed for varying periods this week for the Lunar New Year.
Indian wheat prices hit a fresh record high on Monday, following a delay in releasing extra stocks by the government to boost supplies and calm the domestic market reeling from shortages triggered by last year’s lower crop.
CORN: March corn futures dropped below the 10-day moving average just under $6.70 overnight. Next support is layered from the 20-day moving average at $6.68 1/2 to $6.64. The 100-day average at $6.74 1/2 is initial resistance, followed by the 5-day average at $6.78.
SOYBEANS: March soybean futures left a gap from $15.03 to $15.04 overnight, while also dropping below the psychological $15.00 mark. The contract is challenging the uptrend drawn off the fall lows. Next support would be at the 40-day moving average around $14.84 1/2 and then the uptrend drawn off the summer and fall lows, which intersects around $14.68 1/2 today. Near-term resistance is at $15.00, the 20-day moving average around $15.01 1/2 and the overnight gap.
WHEAT: March SRW wheat futures held within last Friday’s range overnight but remain in the downtrend from the fall highs. Near-term support is layered from last week’s low of $7.27 3/4 to this month’s low at $7.20 1/2. Resistance is layered from the 5-day moving average around $7.40 1/2 to last week’s high at $7.60 1/4.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open the week with a mostly firmer tone, though buyer interest will likely be limited as traders await direction from the cash cattle market later in the week. In last Friday’s Cattle on Feed Report, USDA estimated there were 11.682 million head of cattle in large feedlots (1,000-plus head) as of Jan. 1, down 355,000 head (2.9%) from year-ago but 30,000 head more than the average pre-report estimate implied. December placements dropped 8.0% from year-ago, while marketings declined 6.1%. All three categories were a little on the negative side of the average pre-report estimates, but not enough to move the market. From an underlying standpoint, the data is bullish as feedlot supplies declined from year-ago for a fourth straight month. Last week’s cash trade was again disappointing as packers resisted paying up for cattle. But with market-ready supplies tightening, the cash market will eventually firm and trend higher. Near-term support for April live cattle futures stands at last week’s low of $158.55. Near-term resistance is at the 5-day moving average at $160.06 and then $160.43.
HOGS: Lean hog futures are expected to open weaker amid pressure from the continued decline in the cash hog index. The CME lean hog index is down 63 cents to $72.65 (as of Jan. 19), extending its prolonged seasonal decline. After corrective gains last Friday, February hogs finished $5.175 above the cash index, which will limit additional buying. The upside in futures will be limited to short bouts of corrective buying until the cash market puts in a seasonal low. Near-term support for April lean hog futures stands at last week’s low of $84.08 with additional support at the October low of $82.63. Near-term resistance is the 5-day moving average at $86.34 and last Friday’s high at $86.55. The contract modestly corrected the short-term oversold condition Friday.