GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 4 to 6 cents lower.
Wheat: Steady to 2 cents higher.
GENERAL COMMENTS: Soybeans faced followthrough selling overnight after an initial push to the upside failed to attract sustained buying. Corn and wheat traded on both sides of unchanged but received a modest boost late in the session as the U.S. dollar index dropped sharply following the February jobs data. Crude oil futures are mildly firmer after trading lower overnight. Key today will be whether outside markets provide enough incentive to trigger sustained corrective buying in the corn and wheat markets that are saddled with a lack of bullish news and bearish technicals, especially if overnight pressure on soybeans and soymeal persists.
The U.S. economy added 311,000 non-farm payrolls in February, beating expectations for a rise of about 205,000 jobs last month, but down from a revised figure of 504,000 for January. The unemployment rate rose to 3.6% from 3.4% in last month’s report. Average hourly earnings rose 0.2% and increased 4.6% over the past year. Treasury yields fell and the dollar dropped as investors judged the report would sway Fed policymakers toward a quarter-point hike at its March 21-22 meeting.
Russia continues to talk tough as the March 18 deadline for the Black Sea grain deal looms, but price action in the wheat and corn markets signals traders believe the agreement will be extended.
Weather will remain status quo in South America through the middle of next week. Dry areas of Argentina and southern Brazil will remain dry, while conditions will be too wet in central Brazil. World Weather Inc. says there’s a chance for rains in the dry areas of Argentina and southern Brazil by the second half of next week, while rainfall frequency and intensity should diminish in central Brazil.
CORN: May corn futures turned even more bearish with yesterday’s downside breakout from the bear flag formation, which projects the contract to $5.78. Initial support is at the psychological $6.00 mark. Previous support at $6.22 1/4 is near-term resistance. The contract is short-term heavily oversold and due for a correction.
SOYBEANS: May soybean futures dropped below the 10-day moving average and Thursday’s low overnight. Support is layered from the psychological $15.00 mark to the February low at $14.77 3/4. Near-term resistance starts at the 5-day moving average around $15.15, which capped the upside overnight.
WHEAT: May SRW wheat futures are extremely bearish and have become heavily oversold. Next support is in the $6.60 to $6.47 range.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mixed tone as traders continue to wait on cash cattle trade to develop. But it’s possible active cash trade may not be seen until this afternoon – and packers may not buy many animals this week. After buying a lot of cattle last week, packers have slow played cash negotiations this week. Unless they actively raise cash cattle prices for a sixth straight week, sales volume could be limited, as feedlots are current and don’t need to move a lot of cattle. Wholesale beef prices dropped 18 cents for Choice boxes and $2.07 for Select, while movement was slow at just 87 loads. The wholesale market has hinted at a short-term top this week, though we doubt prices will fall too far given tight market-ready supplies and reduced slaughter weights.
HOGS: Lean hog futures are expected to open with a mixed tone. While the cash hog index continues to rise, the pace of gains has been slow and traders haven’t shown a willingness to extend the premiums in spring and summer futures. April hogs finished Thursday $5.685 above today’s cash index quote (as of March 8) and traders have shown no confidence in building it much beyond that level. But the downside should be limited by firming cash fundamentals. Besides the rising cash index, the pork cutout value firmed 73 cents on Thursday and movement was solid at 318.5 loads.