Ahead of the Open | January 26, 2023
GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 4 to 8 cents higher.
Wheat: Winter wheat 6 to 10 cents higher; spring wheat 3 to 6 cents higher.
GENERAL COMMENTS: Corn, soybean and wheat futures firmed overnight and finished near their session highs. With weekly export sales figures coming in at or above expectations, the firmer tone is expected to continue during early daytime trade. Crude oil futures are around $1.50 higher this morning, which will add price support. The U.S. dollar index is modestly firmer but not enough to influence the grain/soy markets.
USDA reported daily soybeans sales of 106,000 MT to China for 2023-24.
World Weather Inc. says Argentina’s weather will be mixed over the next two weeks, with the west-central and northwestern areas expected to be the wettest while southeastern areas will be driest. Brazil’s issues with it being a little too wet in the center-west and center-south and drier biased in the far south will continue for a while, but these anomalies will gradually improve with the second week of the forecast period offering greater rain in the south and less rain in the north.
World Weather says northwestern areas of the Plains will receive snowfall in the next few days that should protect crops from bitter cold expected this weekend and early next week. Bitter cold in the Northern Plains Sunday and Monday will push some subzero Fahrenheit temperatures into the Central Plains, but early indications still suggest most of the coldest areas will have snow remaining on the ground even though there will be some warming over the next few days to melt some of the region’s snow.
The European model is wetter in the Southern Plains than it was earlier this week, with waves of precipitation occurring in the middle to latter part of next week. The American model is also wetter, but mostly in central Oklahoma and areas south into the heart of Texas. World Weather believes West Texas is advertised to be too wet by the European model.
USDA’s attaché in Beijing reports China is likely to buy a “substantial amount” of Brazilian corn. The post noted: “Feed mills have resumed mixing more corn in feed rations as higher prices for wheat and sorghum reduce demand for corn alternatives. At the same time, Brazilian corn is now available and priced competitively with domestic corn... With the arrival of the first vessel of Brazilian corn in early January 2023, China will likely turn to Brazil for a substantial amount of its corn imports.”
Export sales data for the week ended Jan. 19:
Corn: Net sales of 910,400 MT for 2022-23 fell 20% from the previous week but were up 46% from the four-week average. Mexico was the lead buyer at 407,000 MT, while China purchased 71,800 MT. Sales were near the middle of pre-report expectations ranging from 600,000 MT to 1.4 MMT.
Soybean: Net sales of 1.146 MMT increased 16% from the previous week and 53% from the four-week average. China was the lead buyer at 940,300 MT. Sales were at the top end of expectations ranging from 600,000 MT to 1.2 MMT.
Wheat: Net sales of 500,400 MT for 2022-23 rose 6% from the previous week and 84% from the four-week average. Sales were just above the top end of expectations ranging from 150,000 to 500,000 MT.
CORN: March corn futures found support at the 5-day moving average around $6.74 1/2 overnight and pushed above the 10-day average just above $6.76. Those areas will be initial support, followed by the 20-day average around $6.70. Wednesday’s high at $6.81 will be initial resistance, with stronger resistance at $6.85 and this month’s high at $6.88 3/4.
SOYBEANS: March soybean futures closed above the psychological $15.00 mark on Wednesday and pushed above the 20-day moving average just above $15.04 overnight. But the 10-day moving average around $15.12 1/2 stopped the overnight price advance. That level will serve as initial resistance today, with stronger resistance at $15.37 1/2 and this month’s high at $15.48 1/2. The 5-day average at $14.99 1/2 is near-term support.
WHEAT: March SRW wheat futures matched Wednesday’s high at $7.46 1/2 overnight. That level will serve as initial resistance, followed by the 20-day moving average near $7.48 1/2. Near-term support is at the 10-day average around $7.40 and the 5-day average at $7.36 1/2.
LIVESTOCK CALLS
CATTLE: Choppy to higher.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone, though light selling pressure can’t be ruled out as traders wait on cash cattle trade to develop. Also, Wednesday’s Cold Storage Report showed beef stocks rose more than average during December, which could trigger some seller interest. Feedlots want to buy cattle at lower prices but feedlots have thus far shown no urgency to move cattle at anything less than steady levels. Cash sources expect trade to eventually take place at roughly steady prices with week-ago as packers are thought to be short-bought on near-term slaughter needs, though the trend since mid-December has been for prices to fall short of expectations.
Weekly beef export sales for 2023 totaled 25,100 MT. South Korea was the lead buyer at 10,000 MT.
HOGS: Lean hog futures are expected to open with a mixed tone as the market consolidates waiting on the cash market to post a seasonal low. The CME lean hog index is 22 cents higher to $72.32 (as of Jan. 24). While that’s a modest increase, it’s the first rise since Dec. 27 and offers a glimmer of hope a seasonal low may not be far off. February lean hog futures finished Wednesday at a $4.48 premium to today’s cash quote, which is slightly more than the five-year average gain of $4.01 from now until Feb. 16 when the contract is cash settled. The Cold Storage Report showed pork stocks increased in December versus the normal small drawdown in inventories during the month.
Weekly pork export sales for 2023 totaled 44,700 MT, with Mexico (17,700 MT) and China (12,500 MT) noted buyers.
