GRAIN CALLS
Corn: 2 cents lower to 2 cents higher.
Soybeans: 4 to 8 cents higher.
Wheat: 2 cents lower to 2 cents higher.
GENERAL COMMENTS: Soybeans posted modest corrective gains overnight, while corn and wheat failed to maintain light buyer interest late in the session. Key to price action during early daytime trade will be whether funds show up as buyers after recent, sharp losses or continue to liquidate long positions. Outside markets are mixed in regard to grain/soy futures, with front-month crude oil around 50 cents lower and the U.S. dollar index more than 500 points lower.
Argentina’s southern and central production regions are expected to remain drier than normal over the next 10 days. Far northern Argentina will receive some beneficial rains. World Weather Inc. says there’s a parallel to the 2009 drought in Argentina. In that year, drought persisted deep into its fall (North American spring).
Brazil will continue to see frequent rains, with the heaviest amounts in south-central areas likely to keep soybean harvest and safrinha corn planting delayed.
Dry areas of the west-central and southwestern Plains are not likely to receive any meaningful precip for a while.
La Niña has weakened in the tropical Pacific Ocean and is likely near its end, according to the Australian Bureau of Meteorology. It says, ocean indicators of La Niña have returned to neutral levels, while atmospheric indicators that remain at La Niña levels have started to weaken. The bureau expects neutral conditions through May, with the chance of El Niño developing by the second half of the year. El Niño patterns are associated with below-normal rainfall for Australia but generally produce favorable growing conditions in the U.S., though World Weather notes quick transitions from prolonged La Niña to El Niño weather patterns can lead to drier summers.
USDA this afternoon is expected to report January soybean crush totaled 189.6 million bu. in January, according to a Bloomberg survey. That would be up from 187.4 million bu. in December but below last year’s 194.3 million bu. tally. Corn-for-ethanol use is expected to total 436.8 million bu., up from 425.3 million bu. in December but below 463.5 million bu. in January 2022.
CORN: May corn futures have eroded technically, with bears now having the solid upper hand. Previous support at the December low of $6.36 3/4 is now resistance, followed by the 5-day moving average at $6.42 1/2. Next solid support is at $6.15 1/4.
SOYBEANS: May soybean futures took out the previous reaction low to swing the technical trend to neutral. Tuesday’s low at $14.77 3/4 is initial support, followed by the 100-day moving average around $14.76 and the January low at $14.72. Near-term resistance is the psychological $15.00 mark and previous support at $15.00 1/4.
WHEAT: May SRW wheat futures paused overnight. Additional consolidation around the recent lows would form a bear flag on the daily chart after the recent, sharp selloff. Tuesday’s low at $7.02 1/2 is initial support, followed by the psychological $7.00 mark. Near-term resistance is at old support of $7.20 3/4 and the 5-day moving average at $7.18 3/4.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone on support from bullish fundamentals, though price action is likely to be choppy as traders await active cash cattle trade. February live cattle futures expired at $167.50 on Tuesday, just over $2 above the April contract. The new lead-month contract finished yesterday $1.755 above last week’s average cash cattle prices. Cash sources are expecting cash cattle trade to be at least $1 higher again this week, so the current premium in April futures is rather modest. Choice boxed beef prices firmed another 61 cents on Tuesday to $288.95, the highest level since January 2022. Strong wholesale beef prices are keeping packer margins solidly in the black even amid rising cash cattle prices.
HOGS: Lean hog futures are expected to open with a mixed tone this morning. While the cash market continues to strengthen, traders have shown no willingness to increase the premiums in spring- and summer-month contracts. In fact, they have narrowed those premiums recently. The CME lean hog index is up 24 cents to $78.51 (as of Feb. 27). The pork cutout value dropped $1.58 on Tuesday, driven largely by a nearly $12 decline in primal belly prices. The wholesale beef/pork ratio stands at 3.43, which is extremely high, signaling pork is cheap compared to beef. We anticipate this will lead to retailers actively featuring pork after Easter, especially if they continue to struggle to get beef orders filled.