10:30 Market Snapshot | January 5, 2023

Corn futures are 2 to 3 cents lower at midmorning.

• Corn futures are being pulled lower by spillover from soybeans and demand concerns.
• Ethanol production plunged 119,000 barrels per day (bpd) to an average of 844,000 bpd during the week ended Dec. 30. That was down 19.5% from the corresponding week last year. Ethanol stocks declined 192,000 barrels to 24.444 million barrels.
• Implied gasoline demand fell most since March 2020, which could lead to additional declines in ethanol production.
• Traders will have to wait until Friday to get weekly export sales data. Export demand is also a major concern for corn.
• March corn futures dipped below the psychological $6.50 mark but have found limited followthrough selling. Near-term support is layered in the $6.50 to $6.35 area.  

Soybeans are trading 5 to 7 cents lower, March soybean meal futures are around $3 higher and March soyoil is 40 points lower.

• Soybeans are extending their sharp corrective pullback to kick off the new year amid chart-based selling.
• Traders are also actively taking profits out of the long side of the market amid the long liquidation that has dominated trade to kick off the new year.
• While China has been an active buyer of U.S. soybeans, Brazil is producing a record crop and will soon challenge U.S. supplies on the global market.
• 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. 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.
• March soybean futures are testing uptrending support drawn off the October and November lows. Next support would be the 40-day moving average at $14.66 3/4 and then the 50-day average around $14.60.

Winter wheat futures are 3 to 5 cents lower with spring wheat 1 to 3 cents higher.

• Winter wheat futures continue to fade amid a lack of supportive news and spillover from corn and soybeans.
• Strength in the U.S. dollar index, which is up nearly 1,000 points this morning, is weighing on the market. The dollar strength is adding to export demand concerns.
• Spring wheat futures are trying to work higher after recent losses, but corrective buying is limited.
• March SRW futures are pivoting around Wednesday’s low at $7.44 1/4. Near-term support is layered from $7.40 to the December low at $7.23 1/2. 

Live cattle are slightly lower this morning, while feeders are moderately lower in nearby contracts.

• Nearby live cattle futures are modestly weaker as traders wait on active cash cattle trade to get underway.
• Traders still anticipate firmer cash cattle prices compared with last week’s average of $157.81, though packers so far have been reluctant to actively bid for supplies.
• 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.
• Feeder cattle are lower despite weakness in the corn market as futures pull back following yesterday’s strong gains.
• Near-term support for February live cattle is at Tuesday’s low of $156.65. Last week’s contract high at $159.175 is near-term resistance.

Hog futures are sharply lower in most contracts this morning.

• Lean hogs are sharply extending this week’s large price pullback amid concerns the cash market has not yet posted a seasonal low.
• The CME lean hog index is down 39 cents to $79.06. That’s still 46 cents above the seasonal low to date posted in late December, but after three consecutive days of declines, traders aren’t convinced a low has been posted.
• February lean hog futures are now around $3 above the cash index, which is more than $4.50 below the average seasonal increase 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.
• February lean hog futures dropped as low as $82.075. Key support is at the December low of $81.65.