GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 4 to 8 cents lower.
Wheat: 6 to 10 cents higher.
GENERAL COMMENTS: Wheat futures extended Tuesday’s corrective gains in overnight trade, while soybeans were weaker. Corn faded from its overnight highs late in the session but were steady to fractionally firmer. We anticipate similar price action this morning with corn caught between conflicting spillover influences from the other markets. Outside markets will provide little influence to grain and soy futures, with crude oil near unchanged and the U.S. dollar index just modestly firmer.
USDA reported daily sales of 130,000 MT of soybeans and 100,000 MT of corn – both to unknown destinations for 2022-23.
Recent rains across Argentina surpassed the “most optimistic” forecasts, the Rosario Grain Exchange said in a report on Tuesday, bringing relief to drought-parched crops. But “variability was extreme” in coverage levels. The exchange says rainfall above the key level of 45 mm (1.8 inches) was received across 15% of the Pampas region, 15% of Buenos Aires, 10% of La Pampa, 5% of Sante Fe and 3% of Cordoba, while some areas got none.
World Weather Inc. says rainfall across Argentina over the next week will be greatest in west-central and northwestern parts of the country, but enough rain will occur in other areas to limit the potential for a further decline in crop conditions. World Weather anticipates more drying in Argentina during February – “at least for a while.”
Brazil’s southern crop areas will remain down over the next week but the pattern should give way to improved precipitation and soil conditions in the second week of the forecast. Center-west and center-south Brazil will continue to experience frequent bouts of rain that will continue to slow soybean harvest and safrinha corn planting.
World Weather says U.S. winter wheat areas should all be adequately protected against the bitter cold coming this weekend into next week, although some snow melt is expected in the Central and Southern Plains late this week. The snow-free areas will not likely be cold enough to be threatened with potential winterkill, despite some market worry to the contrary.
India will sell up to 3 MMT of wheat from government stocks to bulk consumers such as flour millers, as part of efforts to bring down prices, a government official told Reuters. On Wednesday, wheat prices in the Indore market jumped to a record 29,821 rupees ($365.61) per metric ton, up nearly 9% so far this month after rising 37% in 2022. In New Delhi, wheat prices rose nearly 1.5% to a record 32,500 rupees. The allocation is more than the 2 MMT traders expected.
CORN: Bulls have the technical advantage in March corn futures with the contract trading above the short-term, intermediate and 100-day moving averages. Initial resistance is at the 200-day moving average at $6.77 1/2 and the overnight high at $6.81. Stiff resistance is at the December high of $6.85 and this month’s high at $6.88 3/4. Near-term support is layered from $6.77 3/4 to Monday’s low at $6.61 1/4. The short-term, intermediate and 100-day moving averages all lie within that range.
SOYBEANS: March soybean futures failed to find sustained buying above $15.00 on Tuesday and closed lower. The contract extended yesterday’s losses overnight, falling below the 40-day moving average around $14.86 1/2. Initial support is the 50-day average around $14.77 1/2, followed by the last reaction low on Jan. 5 at $14.65. Near-term resistance starts at the 40-day moving average and extends to the psychological $15.00 mark.
WHEAT: March SRW wheat futures pushed above the 10-day moving average at $7.39 1/2 overnight, which attracted additional corrective buying. Near-term resistance is the 20-day average at $7.50 1/4. Support is layered from $7.34 1/2 to Monday’s 16-month low at $7.12 1/2.
LIVESTOCK CALLS
CATTLE: Choppy to higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a firmer tone on followthrough buying, though price action is likely to be two-sided as traders await direction from the cash cattle market. Cash sources signal packers are short-bought on near-term slaughter needs but will likely resist increasing cash prices as long as possible in hopes some feedlots will want to get animals out of feedlots amid the stressful winter conditions. Wholesale beef prices have started their seasonal downturn. Choice boxed beef prices fell $1.80 on Tuesday, while Select dropped $2.10. The weaker prices attracted increased retailer demand, with movement rising to 138 loads on the day. Technically, April live cattle futures appear headed for a near-term test of the contract high at $162.75 after rebounding sharply from last week’s spike of the long-term uptrend. Fall- and winter-month contracts posted new highs yesterday.
HOGS: Lean hog futures are expected to open with a mixed tone this morning as traders wait on the cash market to post a seasonal low. The CME lean hog index is down 2 cents to $72.11 (as of Jan. 23), the smallest daily decline in quite some time. Until the cash index shows signs it has bottomed, however, the upside will be limited to modest corrective buying. The pork cutout value firmed 68 cents to $81.60 during morning trade on Tuesday but finished the day 86 cents lower at $80.60. While retailers showed resistance above $81.00 in the cutout value, movement stayed strong at 360.3 loads. Strong underlying support should limit the downside in wholesale pork prices. April lean hog futures are consolidating in the $84.00 to $86.00 range, with strong support at the October low of $82.625. Near-term resistance is at the 10-day moving average at $86.765.
USDA’s Cold Storage Report this afternoon will detail frozen meat stocks at the end of December. The five-year average is a 4.7-million-lb. increase in beef stocks and a 3.2-million-lb. decline in pork stocks during the month.