GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 3 to 5 cents lower.
Wheat: Winter wheat mixed; spring wheat 5 to 8 cents lower.
GENERAL COMMENTS: Corn and soybeans posted mild losses overnight following light, two-sided trade. The wheat market was mixed overnight. Outside markets are mildly price-negative for the grain and soy markets, with crude oil slightly weaker and the U.S. dollar index firmer.
South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean and corn crop estimates another 1 MMT each to 31 MMT and 40 MMT, respectively. Cordonnier kept his Brazilian crop estimates at 151 MMT for soybeans and 121 MMT for corn.
Rain is still predicted for western and far southern Argentina this week. Santa Fe, southern Chaco and northern Buenos Aires eastward will be dry for the next 10 days, according to World Weather Inc. Rains will extend into areas of southern and central Brazil, though southern and western Rio Grande do Sul will remain dry.
Some states are now releasing winter wheat crop condition ratings on a weekly basis. On note, conditions in Kansas declined two percentage points to 17% “good” to “excellent.” The good/excellent ratings improved three points in Oklahoma to 39%, while Texas was unchanged at 19%.
China imported 16.17 MMT of soybeans during the first two months of the year, up 16.1% from the same period last year and the most ever for January and February combined. Importers actively took delivery of soybeans from the U.S. during the first two months of this year amid Brazilian soybean harvest delays. China’s overall exports and imports both declined during the first two months of the year, reflecting weak demand overseas and domestically. China’s exports during January and February combined fell 6.8% from the same period last year. Imports dropped 10.2% during the first two months.
Traders will be preparing for Wednesday’s USDA Supply & Demand Report. Traders expect 2022-23 U.S. ending stocks to come in at 1.308 billion bu. for corn (up 41 million bu. from February), 220 million bu. for soybeans (down 5 million bu.) and 573 million bu. for wheat (up 5 million bu.). Much of the focus will be on USDA’s South American production forecasts, especially for Argentina. Expected cuts to the Argentine crop estimates are likely to increase USDA’s global corn and soybean ending stocks forecasts for 2022-23.
CORN: May corn futures continue to consolidate after the recent sharp price drop. A bear pennant has formed on the daily chart, making last week’s spike low at $6.22 1/4 critical near-term support. Violation of that level would open sharp downside risk. Near-term resistance is at last Friday’s high at $6.42 3/4, followed closely by the 10-day moving average around $6.43 3/4.
SOYBEANS: May soybean futures posted a modest inside day down overnight following Monday’s strong gains. Near-term support is in the $5.19 1/2 to $15.12 1/2 range where the short-term and intermediate moving averages stand. Near-term resistance extends from Monday’s high at $15.38 1/2 to the February high at $15.49 3/4.
WHEAT: May SRW wheat futures posted a downside breakout from the bear flag formation on Monday and showed mild followthrough selling overnight. Monday’s price action was technically bearish and projects the contract sharply lower without reversing price action. Near-term support is the $6.84 3/4 to $6.81 3/4 range. Previous support at $7.01 3/4 is initial resistance, with stronger resistance at $7.20 3/4.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed tone this morning. While fundamentals are bullish and futures scored new contract highs yesterday, traders are likely to remain rather cautious toward the long side of the market as they await active cash cattle trade, which is anticipated until late in the week. Packers purchased 91,000 head of cattle in the negotiated market last week, the second highest tally of the year. That may slow packer interest in cash cattle this week, though cutting margins remain strong, giving them incentive to keep buying cattle. The fact packers have reduced slaughters amid strong margins speaks to the limited number of market-ready cattle that are available. Choice boxed beef prices firmed 88 cents on Monday, while Select slipped 39 cents. Packers moved only 94 loads on the day.
HOGS: Lean hog futures are expected to open with a mostly firmer tone. While cash fundamentals continue to strengthen, the path of least resistance is down and traders have shown no willingness to actively buy. The CME lean hog index is up another 20 cents to $78.91 (as of March 3), extending its seasonal climb. While the rally hasn’t been strong on a per-day basis, the index has firmed $6.80 over the past six weeks. During the same span, April lean hog futures have dropped $1.975. After Monday’s sharp losses, the lead contract’s premium to the cash index is down to $4.565. The pork cutout firmed $1.76 on Monday amid gains in all cuts except picnics. Movement was relatively light at 264.4 loads.
China imported 1.3 MMT of meat in January and February combined, up 21.2% from the same period last year. China doesn’t break down meat imports by category in the preliminary data, but much of the strong year-over-year increase was likely driven by pork imports, which began to ramp up in late 2022. USDA’s attaché in Beijing expects China’s pork imports to rise 4% this year to 2.2 MMT amid increased demand. It expects beef imports will be slightly lower at 3.4 MMT.