GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 2 to 4 cents higher.
Wheat: 1 to 5 cents lower.
GENERAL COMMENTS: Corn and soybeans firmed late in the overnight session, while wheat futures came off their lows. Light price action is likely this morning as traders await USDA’s Supply & Demand Report at 11 a.m. CT. Outside markets are mildly negative, with crude oil weaker and the U.S. dollar index mildly firmer this morning.
In USDA’s 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 decrease USDA’s global corn and soybean ending stocks forecasts for 2022-23.
Argentina’s soybean production could fall as low as 25 MMT, according to the head of Oil World, as the crop continues to struggle with weather stress.
Argentina authorized exporters to postpone for 360 days corn export licenses for shipment between March 1 and July 31 due drought impacts on production.
Central and eastern Argentina into far southern Brazil, Uruguay and southwestern Paraguay will be dry or experience net drying conditions for the next 10 days, according to World Weather Inc. Western and far southern Argentina will get periodic rainfall. Rains across south-central Brazil will continue to slow soybean harvesting and safrinha corn planting.
Russia’s demands for the extension of a deal that allows Ukrainian grain exports through the Black Sea have not yet been met, a Turkish diplomatic source said on Wednesday, adding that Ankara is “working very hard” and “doing its part” to ensure the deal continues.
CORN: May corn futures continue to trade within the short-term consolidation range after the sharp price drop. Key support is at last week’s low of $6.22 1/4. Violation of that level would be a downside breakout from the bear flag formation, which would project the contract sharply lower. Near-term resistance is the 10-day moving average at $6.42 and previous support at $6.48 1/4.
SOYBEANS: May soybean futures found support overnight at Monday’s low at $15.10 3/4, which will continue to serve as initial support. Additional support is in the $15.08 1/4 to $15.07 1/4 range, followed by the psychological $15.00 mark. Near-term resistance is the 20-day moving average just above $15.19.
WHEAT: May SRW wheat futures continue to erode technically, falling below yesterday’s low overnight. The contract is short-term oversold and due for a correction, but the path of least resistance remains down. Near-term support is at $6.81 3/4. Near-term resistance is the psychological $7.00 mark, which is closely backed by the 5-day moving average.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed tone in what is likely to be light trade as traders await cash cattle trade. Cash sources expect firmer cash cattle trade to eventually be seen, though packers are likely to slow-play the process again this week in hopes of getting feedlots to move cattle at steady/weaker prices. But feedlots are well positioned to hold out for higher prices again this week. Feeder cattle prices are surging. The CME feeder cattle index has broken out to the upside recently, surging to the highest level since fall 2015. Not only will feeder cattle supplies remain tight, but the recent decline in corn prices has sparked increased demand for feeders. While futures hold premiums, the recent surge in the cash index remains price-supportive.
HOGS: Lean hog futures are expected to open with a mostly firmer tone amid supportive cash fundamentals. The CME lean hog index is up 18 cents to $79.09 (as of Feb. 6), extending its methodical price rise over the past month and a half. After a strong finish on Tuesday, April lean hog futures built their premium to today’s cash quote to $5.71. The pork cutout value slipped 31 cents on Tuesday as all cuts except picnics and hams declined. The modest drop in the wholesale price spurred an increase in movement, as packers moved 312 loads of product on the day, signaling there’s solid retailer buying under the market.