Ahead of the Open | January 24, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 4 to 8 cents higher.
Wheat: SRW 2 to 4 cents higher; HRW and HRS 5 to 8 cents higher.
GENERAL COMMENTS: Corn, soybean and wheat futures recouped part of Monday’s sharp losses in corrective trade overnight. We expect additional corrective buying during daytime trade. Funds, who were active sellers on Monday, will be key to how far grain and soy futures extend to the upside. Crude oil futures and the U.S. dollar are both modestly firmer this morning but won’t influence grain trade.
USDA announced daily sales of 130,000 MT of corn to unknown destinations for 2022-23.
Significant snow will fall today and Wednesday from the Texas Panhandle through Oklahoma and the lower and eastern Midwest, causing some stress to livestock. World Weather Inc. says arctic air is still expected to slip southward through Canada’s Prairies late this week and during the weekend before reaching the northern half of the U.S. Plains and upper Midwest during the weekend and it will linger into early next week. Some snow will precede the event and most wheat areas will be sufficiently protected from the cold by snow.
World Weather expects Argentina to receive rain during the coming 10 days with sufficient amounts to improve crop conditions. Brazil also will get rain over the next 10 days, with the frequency and intensity still be a little higher than desired for soybean maturation and harvest progress in some areas. Southern Brazil rainfall will be restricted, leading to some drying that may help early soybean harvesting and safrinha crop planting, although the area that needs dry weather most is Mato Grosso.
Aside from weather, news is relatively limited with most Asian markets, including China, closed for the Lunar New Year holiday.
CORN: March corn futures rebounded above the 20-day moving average overnight after closing below it for the first time since Jan. 11 on Monday. That level at $6.69 will serve as initial support, with additional support layered down to Monday’s low at $6.61 1/4. The 10-day moving average around $6.71 1/2 halted the corrective rebound overnight and will serve as initial resistance today. Additional resistance is in the $6.74 1/4 to $6.77 1/2 range where the 5-, 100- and 200-day averages are located.
SOYBEANS: March soybean futures poked above the psychological $15.00 mark overnight but failed to find sustained buying above that level. It will serve as initial resistance, followed by Monday’s gap from $15.03 to $15.04. The 20-day moving average lies within that range, making it a key near-term level. Above that, resistance is at the 5-day moving average at $15.07 1/2 and the 10-day average just above $15.10. Near-term support extends from the 40-day moving average at $14.86 to the 50-day average at $14.76 3/4.
WHEAT: March SRW wheat futures posted a modest inside day up overnight after plunging to the lowest level since September 2021 on Monday. Yesterday’s low at $7.12 1/2 is near-term support. Near-term resistance starts at the 5-day moving average around $7.32 1/2, followed by the 10-day average at $7.37 1/4.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures posted solid corrective gains on Monday but finished well off their highs. We expect choppy trade with a slightly firmer bias this morning as traders prepare for what will likely be another lengthy standoff in cash cattle negotiations. A third round of wintry weather hitting the Plains will further stress cattle in feedlots but packers are still trying to restrict paying higher money for cash cattle as they work to improve their margins. Cash sources expect steady to firmer cash prices compared with last week’s $155.32 average, but active trade may not come until late in the week.
HOGS: Lean hog futures are expected to open with a mostly weaker tone amid continued pressure from the cash market. The CME lean hog index is down another 52 cents to $72.13 (as of Jan. 20), extending the prolonged seasonal decline from early August of last year to more than $50.00. With market-ready supplies ample to fill near-term slaughter needs, packers are focused on improving their margins ahead of a seasonal firming of cash prices into mid-summer. The pork cutout value firmed 93 cents on Monday to $80.92, though that’s down nearly $15.00 from last year at this time.
