GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 8 to 10 cents higher.
Wheat: Winter wheat 5 to 7 cents higher; HRS 4 to 6 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat trended higher overnight on corrective gains, going into the break near session highs. The 11:00 a.m. CT USDA reports will be the main focus in the marketplace today. Outside markets were mixed overnight, as front-month crude oil futures surged to a three-week high and the U.S. dollar index saw modest gains.
The Bureau of Labor Statistics released the December Producer Price Index this morning, which tracks inflation in the commodities sold for personal consumption, capital investment, government and export. Prices unexpectedly declined .1% month-over-month, compared to expectations of a .1% rise. That marks three consecutive months of deflation in producer prices. This is a sharp contrast to the consumer inflation coming in higher-than-expected Thursday and could indicate that gain will be short lived.
Today is one of the busiest report days of the year for the grain markets as USDA will release its Annual Production Summary, monthly Supply & Demand Report, Quarterly Grain Stocks and Winter Wheat Seedings at 11:00 a.m. CT. Much of the focus will be on USDA’s “final” crop estimates for corn and soybeans. But Dec. 1 grain stocks have a history of providing market-moving surprises, especially for corn. With corn, soybeans and wheat struggling to attract buyer interest, bullish data is likely needed to put in market bottoms.
The U.S. and Britain carried out air and sea strikes on Houthi military targets in Yemen in response to attacks by the Iran-backed group on shipping in the Red Sea. The attacks represent a significant escalation in the conflict and add to concerns about potential impacts of a broader conflict in the Middle East. President Joe Biden characterized the strikes as a necessary retaliation to protect against Houthi violence, which had affected several countries. He said attacks by the Houthis endangered U.S. personnel, civilian mariners and international partners. They also posed a threat to trade and freedom of navigation in the Red Sea. Biden expressed a willingness to take further measures to protect people and international commerce if necessary.
China’s ag ministry raised its 2023 corn production estimate by 610,000 MT to 288.84 MMT due to increased planted acreage. The ministry trimmed its 2023 soybean crop estimate 50,000 MT to 20.84 MMT. It made no changes to its forecasts for corn or soybeans imports in 2023-24, which stand at 17.5 MMT and 97.25 MMT, respectively.
CORN: March corn futures continue to struggle against initial resistance at $4.59. Bulls are seeking to close prices above $4.62 1/4 and $4.67 1/2 on report driven strength. Support stands at $4.55 3/4, $4.51 3/4, then the psychological $4.50 level.
SOYBEANS: March soybean futures continue to base near recent lows. Bulls are eyeing a close above initial resistance at $12.45, though bulls are seeking a close higher than more meaningful resistance on report driven strength, such as $12.59 1/2 or the 20-day moving average at $12.81 1/4. Support stands at $12.36 1/2, $12.34, then the psychological $12.25 mark.
WHEAT: March SRW futures continue to trade in choppy, back and forth markets. Bulls continue to struggle against converged 10-day, 20-day and 40-day moving average resistance near $6.11. Continued strength targets $6.22 1/2, while support stands at $6.04, then $5.96 1/4.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures and feeders are expected to open with a mostly firmer tone as prices continue to edge their way higher on the daily bar chart. After weakness early on Thursday, bulls quickly reversed losses with futures ending near session highs and above resistance that had capped gains over the last week. Cash cattle trade has been slow to start, in part because of the winter snowstorms limiting slaughter runs and packers’ urgency to aggressively buy cattle. Cash trade started on a modestly firmer note, with this week’s average at $174.87 so far, up from last week’s average of $174.01. Choice cutout rose $2.82 to $285.89, marking the fifth consecutive day of gains. Select firmed $3.00 to $269.94, further narrowing the Choice/Select spread to $15.94.
HOGS: Lean hog futures are expected to open with a mostly firmer tone, though technical selling could limit gains. February futures have rallied for six consecutive sessions, with Thursday’s peak coinciding with Tuesday’s top, indicating stiff technical resistance. Prices have been spurred higher by the rebounding CME lean hog index, which is up another 31 cents to $66.77 (as of Jan 10), marking five of the last seven days with gains. February futures hold a $5.83 premium to the cash index, indicating traders believe the coming month will yield solid gains in the cash market. Wholesale pork prices fell $2.12 to $84.54 Thursday, with drops in every cut but hams and bellies.