GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 10 to 15 cents higher.
Wheat: SRW 3 to 5 cents higher; HRW and HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn, soybean and wheat futures firmed on corrective buying overnight. Soybeans and corn finished near their overnight highs despite disappointing (corn) to neutral (soybeans) weekly export sales data, as crude oil firmed and the dollar gave back all of its earlier gains after the December employment data was released. We expect a solidly firmer open in the grain and soy markets this morning amid ideas recent losses have been overdone, though it has been a struggle to sustain buyer interest through daytime trade on pushes to the upside this week.
USDA announced daily sales of 132,000 MT of soybeans to unknown destinations for 2022-23 and 112,000 MT of corn to Mexico – 89,600 MT for 2022-23 and 22,400 MT for 2023-24.
Weather models are in disagreement over the amount of rainfall Argentina may receive next week. The European model removed precipitation from Argentina for mid-week next week. The U.S. model runs increased Argentina rainfall for mid-week next week. World Weather Inc. anticipates a few showers and cooler temps with a frontal passage through Argentina next week, but a poor distribution of rain is expected and a more significant bout of rain will still be needed to change drought status. Southern Brazil is also likely to remain mostly dry over the next five days, with some potential for scattered showers by the middle to late part of next week. Conditions will remain mostly favorable in other areas of the country.
Australian wheat production is expected to rise to a record 42 MMT as yields exceeded already-high expectations, traders and analysts told Reuters. In December, the Australian Bureau of Agricultural and Resource Economics (ABARES) estimated wheat production at 36.6 MMT. However, the rainfall that drove stronger yields has likely resulting in a large portion of the Australian crop developing into average or below-average milling wheat.
The UN Food and Agriculture Organization (FAO) global food price index dropped for the nineth straight month and was 1.0% below year-ago. The decline in December was driven by a steep drop in the international prices of vegetable oils, along with smaller declines in cereal grains and meats. Compared to year-ago, prices were up 2.5% for meat, 7.8% for dairy, 4.8% for cereal grains and 0.7% for sugar, while vegoils dropped 19.1%.
Export sales for the week ended Dec. 29 included:
Corn: Net sales of 319,200 MT for 2022-23 were below expectations that ranged from 400,000 MT to 1.0 MMT.
Soybeans: Net sales of 721,000 MT for 2022-23 were near the middle of the wide pre-report range of estimates from 400,000 MT to 1.2 MMT. China purchased 421,800 MT of soybeans for the week, including 71,400 MT switched from unknown destinations and decreases of 67,000 MT.
Wheat: Net sales of 47,100 MT for 2022-23 were far below expectations that ranged from 200,000 to 575,000 MT.
The U.S. economy added 223,000 non-farm payrolls in December, slightly more than the 200,000 economists expected, though down from November’s revised number of 256,000 jobs added. The unemployment rate dropped to 3.5% from 3.7% previously. Average hourly earnings rose 0.3% in December and were up 4.6% from year-ago.
CORN: March corn futures bounced as high as $6.58 1/2 overnight but are poised for a sharp weekly decline from last Friday’s close of $6.78 1/2. Near-term resistance is the 5-day moving average around $6.62 1/2. Thursday’s low at $6.48 1/2 is near-term support.
SOYBEANS: March soybeans found support at the 40-day moving average around $14.67 1/2 on Thursday and reached as high as $14.83 3/4 overnight. But the contract is down sharply from last Friday’s close of $15.24. Near-term resistance is the 20-day moving average just above $14.86 and the 10-day average at $14.92 1/4. Thursday’s low at $14.65 is near-term support, followed by the 50-day average around $14.61 1/2.
WHEAT: March SRW wheat futures reached as high as $7.54 1/4 in corrective trade overnight but are down sharply from last Friday’s close at $7.92. Near-term resistance is layered from $7.59 3/4 to $7.68, with the 5-, 10- and 20-day moving averages all in that range. Thursday’s low at $7.36 is initial support, with stronger support at the December low of $7.23 1/2.
LIVESTOCK CALLS
CATTLE: Choppy.
HOGS: Choppy to higher.
CATTLE: Live cattle futures are expected to open with a mixed tone. While the long-term outlook for the cattle market is bullish, this week’s cash cattle trade has been disappointing. Cash cattle started trading at $157 in the Southern Plains, about steady with week-ago, though some feedlots continued to hold out for higher prices. Trade in the northern market was limited. While feedlots may get packers to pay higher prices than last week, the gains won’t likely be as strong as initially anticipated. February live cattle finished Thursday at $157.35, slightly lower than last week’s $157.81 average cash price, signaling traders remain cautious buyers despite the bullish long-term outlook.
USDA reported net beef sales reductions of 6,900 MT for 2022 and sales of 12,500 MT for 2023.
HOGS: Lean hogs are expected to open with a mostly firmer tone on corrective buying amid ideas sharp losses the previous five sessions have been overdone. But our confidence in a meaningful corrective bounce is low given continued pressure on the cash market. The CME lean hog index is down 80 cents to $78.26 (as of Jan. 4), marking a new low in the seasonal decline. February lean hog futures posted sharp losses on Thursday and finished $4.265 above today’s cash index quote. The pork cutout value fell $1.51 on Thursday as all cuts except ribs declined. Traders will likely remain cautious toward front-month futures until cash fundamentals solid signs of a seasonal low.
USDA reported net pork sales reductions of 51,900 MT for 2022 and net sales of 73,600 MT for 2023.