GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 4 to 6 cents lower.
Wheat: Steady to 2 cents higher.
GENERAL COMMENTS: Wheat continues to see relative strength and lead to the upside. Corn and beans struggled to garner much bullish momentum overnight. Volatility persists in outside markets, drawing from productive price action in grains. Front-month crude oil futures are seeing modest consolidation while the U.S. dollar index is up over 400 points this morning.
President Trump announced on social media that he has selected Kevin Warsh to be the next Federal Reserve chair. Reports surfaced late Thursday that Warsh would be Trump’s new Fed chair nominee. U.S. stocks dropped sharply and U.S. Treasury yields pushed higher, while gold and silver prices posted strong losses, following the Warsh news, while the U.S. dollar index rose. These markets’ reactions reflected speculation Warsh may be less enthusiastic to cut interest rates than other Fed chair candidates, given his past warnings of inflation risks and more recent calls for the Fed to reduce its balance sheet. However, Warsh has more recently echoed Trump’s criticism of the Fed for being too slow to ease its monetary policy. “He’s a hawk,” said CNBC commentator Joe Kernen, regarding Warsh’s stance on U.S. monetary policy. “That’s good for the stock market longer-term, but not right now,” Kernen said.
President Trump and U.S. Senate Democrats have reached a tentative deal to avoid a disruptive federal government shutdown as the White House continues to negotiate with the Democrats on placing new limits on immigration enforcement policy. “Trump announced that an agreement had been reached and urged both parties to vote for it. However, lawmakers are almost certain to fail to enact the measure before a Friday night deadline. While a short funding lapse and partial government shutdown is now seen as the most likely scenario, the effect on federal operations would be minimal if it’s swiftly resolved within a couple days,” Bloomberg reported. The deal between Trump and Democrats makes it more likely that lawmakers would be able to avoid a long shutdown, which occurred last year.
CORN: March corn futures pulled back from recent gains overnight. Stiff resistance stands at $4.31, the 20-day moving average. Bulls are looking to hold support at $4.28 1/2 then $4.25 on a turn lower.
SOYBEANS: March soybeans saw followthrough selling overnight. Support comes in at $10.65 then $10.60, while bulls are looking to break prices above resistance at $10.75 before tackling this week’s high of $10.85 1/2.
WHEAT: March SRW futures continue to lead strength. Resistance stands at $5.44 1/2 then the psychological $5.50 mark. Support comes in at $5.33 1/2 on a turn lower.
LIVESTOCK CALLS
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open mixed as prices are caught between stout fundamental support and persistent resistance near this month’s highs. Cash trade remains slow to develop, providing little catalyst to the futures market. Wholesale beef has fallen under modest pressure this week as well, further drawing from bulls’ strength. Choice cutout slid $2.08 to $367.66 Thursday while select sunk $2.85 to $360.72.
HOGS: Lean hogs are expected to open with a mostly firmer tone, supported by technical strength. Mid-week losses were limited by 10-day moving average support, which persists at $95.20. Weakening cash fundamentals could weigh on futures, as pork cutout slid another $1.62 to $93.43 Thursday, led by losses in ribs and bellies. The CME lean hog index is seeing smaller daily gains as well, as it is up another 26 cents to $85.48 as of Jan. 28.