GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: Steady to 2 cents higher.
Wheat: Steady to 2 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each traded in tight ranges overnight on light volume ahead of today’s USDA reports. Positioning is likely to continue to drive trade through much of the morning. Outside markets are supportive this morning as front-month crude oil futures continue to climb while the U.S. dollar index is modestly lower.
President Donald Trump as expected raised tariffs on steel and aluminum imports to a flat 25% without exceptions, aiming to support struggling domestic industries but escalating trade tensions worldwide. The measures, effective March 4, eliminate country-specific exemptions and extend to downstream steel and aluminum products, affecting key suppliers such as Canada, Mexico, Brazil and South Korea. The move expands Trump’s 2018 Section 232 tariffs, justifying the action on national security grounds. “It’s 25% without exceptions,” Trump emphasized, adding that reciprocal tariffs on countries taxing U.S. goods will be announced soon. Trump later said he would give “great consideration” to Australia’s request for an exemption to the steel tariffs due to its trade deficit with the United States.
Analysts expect USDA to make modest changes to its domestic usage and ending stocks forecasts in the Supply & Demand Report at 11:00 a.m. CT. Traders expect slightly smaller ending stocks of 1.526 billion bu. for corn (1.540 billion bu. in December) and 374 million bu. for soybeans (380 million bu. in December). Wheat ending stocks are expected to be 799 million bu. (798 million bu. in December). USDA’s global production and ending stocks forecasts may attract more market attention.
South American crop consultant Dr. Michael Cordonnier raised his Brazilian soybean crop estimate 1 MMT to 171 MMT due to “surprising harvest progress in central Brazil last week and the anticipation of another good harvest week this week.” With somewhat drier weather in the forecast, he is less concerned about harvest delays and crop quality. Cordonnier left his Brazilian corn production forecast at 123 MMT, though he has a neutral to lower bias given safrinha planting delays in Mato Grosso. Cordonnier kept his Argentina production forecasts at 49 MMT for soybeans and 47 MMT for corn as weather improved last week and more rains are expected in central production regions during the next two weeks.
CORN: March corn futures saw modest followthrough strength overnight. Bulls are eyeing initial resistance at $4.95 before tackling resistance at $4.98 1/2. Support stems from $4.89 3/4, the 10-day moving average, then $4.84 1/2 on report driven selling.
SOYBEANS: March soybean futures saw action on either side of unchanged overnight. The psychological $10.50 mark continues to serve up resistance, which is reinforced by resistance at $10.60 1/2. Support comes in at $10.45 3/4 then $10.43 on additional selling pressure.
WHEAT: March SRW futures saw modest strength overnight. Bulls are targeting initial resistance at $5.87 3/4 before tackling stiff resistance at $5.91 3/4. Support comes in at $5.78 1/2 then the 10-day moving average at $5.73 1/4 on resurgent selling pressure.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures and feeders are expected to open with a mostly weaker tone, driven by technical selling pressure. April live cattle futures posted strong gains Monday, bringing prices to the upper end of the recent range, which is likely to spur technical selling. Steep discounts to the cash market could limit losses after the open. Packers continue to slow slaughter runs in an effort to mitigate poor margins and manage tight supplies. Wholesale beef prices were higher Monday as Choice cutout climbed $1.63 to $323.50 while Select rose $1.02 to $313.92.
HOGS: Lean hog futures are expected to open with a mostly weaker tone in a continuation of Monday’s selling pressure. While expiring February futures have been supported by strength in the cash market, deferred futures are struggling to break above key technical resistance. The CME lean hog index is up another 36 cents to $85.75 as of Feb. 7, extending the seasonal climb. Traders anticipate continued strength in the cash market, evidenced by February futures closing yesterday $1.95 above today’s index quote. Pork cutout continues to work higher as well, rising $2.62 to $99.62 Monday as all cuts except butts posted gains.