Ahead of the Open | January 5, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 3 to 5 cents lower.
Wheat: Winter wheat steady to 1 cent higher; Spring wheat 2 to 4 cents higher.
GENERAL COMMENTS: Corn and soybean futures dropped to mild losses at the end of the overnight session after earlier posting modest corrective gains. The late price action suggests both markets will open with a weaker tone this morning in a continuation of the selloff to start the new year. Wheat futures mildly favored the upside overnight amid light corrective buying but could be pulled lower this morning by selling in corn and soybeans, a stronger U.S. dollar and a lack of bullish news. Front-month crude oil futures are trading around $1 higher, while the U.S. dollar index is now nearly 500 points higher.
Due to Monday’s government holiday, USDA’s export sales data for the week ended Dec. 29 will be delayed until Friday morning.
South American forecasts are little changed. World Weather Inc. says southern Brazil and Argentina will experience net drying for the next six days. Rain is expected in Argentina and southern Brazil during the middle to latter part of next week, although no general soaking is likely. Pockets of improved topsoil moisture are possible, but greater rainfall will be needed. Temps in these areas will be very warm to hot Friday through Tuesday of next week and then will slowly cool from west to east during the latter part of next week.
The U.S. trade deficit narrowed to $61.5 billion in November, the lowest since September 2020. Exports declined $5 billion (2%) to $251.9 billion. Imports of goods and services declined $21 billion (6.4%) to $313.4 billion.
CORN: March corn futures failed to find sustained corrective buying overnight. Near-term resistance is at the 20-day moving average around $6.58 3/4 and the 40-day average at $6.60 3/4. Bulls need closes above those levels to suggest a short-term low may be in place. Near-term support is layered in the $6.50 to $6.35 area.
SOYBEANS: March soybeans failed to hold support at Wednesday’s low of $14.80 3/4 overnight. Initial support is the uptrend drawn off the fall lows that intersects around $14.71 1/2. Near-term resistance is the 20-day moving average just under $14.87 and the 10-day average around $14.94 1/2.
WHEAT: March SRW wheat futures remain technically bearish. Near-term resistance is the 20-day moving average at $7.59 3/4, which must be cleared to trigger active corrective buying. Wednesday’s low at $7.44 1/4 is initial support, with stronger support in the $7.40 range down to the December low at $7.23 1/2.
LIVESTOCK CALLS
CATTLE: Steady/firmer.
HOGS: Mixed/lower.
CATTLE: Live cattle futures are expected to open with a firmer tone amid bullish hopes for this week’s cash cattle trade. But cash activity has been slow to develop, which could limit buyer interest. Choice boxed beef prices fell $4.05 on Wednesday but were still nearly $16 above year-ago at this time and a record-high for the first week of January. Meanwhile, fed cattle prices are about $12 cheaper than the all-time high for early January set in 2015. That suggests there’s more upside in both live cattle futures and the cash market as market-ready supplies tighten. Near-term resistance for February live cattle is at the 10-day moving average near $157.49. Wednesday’s low at $156.65 is near-term support.
HOGS: Lean hogs are expected to open with a mixed to mostly lower tone as traders wait on the cash market to post a seasonal low. The CME lean hog index is down for a third straight day after a brief uptick. February lean hog futures finished yesterday around $5 above today’s cash index quote, though that’s more than $2.50 less than the 10-year average rally in the cash market from now until mid-February. The pork cutout value dropped 17 cents on Wednesday, but packers moved a strong 411.5 loads of product amid the lower prices. That’s the second straight day with strong movement, signaling there’s active retailer demand with the cutout in the mid-$80 range, which should help limit any sharp near-term pressure. Near-term support for February lean hog futures is at Wednesday’s low of $83.475, with stronger support at the December low of $81.525. The 20-day moving average near $86.22 is near-term resistance.
