Ahead of the Open | January 30, 2023
GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 15 to 20 cents higher.
Wheat: Winter wheat 8 to 12 cents higher; spring wheat 2 to 4 cents higher.
GENERAL COMMENTS: Soy complex and corn futures were supported overnight by Argentine weather concerns. The wheat market was supported by concerns bitterly cold temps across the central U.S. could cause winterkill in the winter wheat crop. We expect the overnight price strength to continue during daytime trade. The U.S. dollar was mildly weaker overnight, while crude oil futures have softened this morning.
Rain in western and southern areas of Argentina this week will be important since the following 10 days will be drier, especially in the central and south, according to World Weather Inc. The forecaster says, “If the trend is correct portions of Argentina will be drying down again during February, but conditions may not get back to the same level of stress as that reported earlier in January. Nevertheless, a boost in rainfall will be needed by mid-February.” Weather models overnight and this morning signaled Argentina’s weather will be wetter in the second week of the outlook, though World Weather says some of the rains were likely overdone. It expects “erratic shower activity” across the country Feb. 5-11.
Some center-south crop areas of Brazil received significant rain varying from 1 to 3 inches over the weekend. Brazil weather is expected to continue a little wetter than desired in some early soybean maturation and harvest areas, according to World Weather. Far southern areas in Rio Grande do Sul will remain drier over the next 10 days.
Brazil’s soybean harvest advanced three percentage points to 5% complete as of last Thursday, according to AgRural. That was half the pace of last year’s harvest on that date. Given the soybean harvest delays, safrinha corn planting was 5% done, behind last year’s 14% at that time.
Snow fell ahead of the bitterly cold temps that have moved into the central U.S., which provided insulation for the U.S. winter wheat crop. World Weather says, “Winterkill or wheat damage cannot be ruled out, although the impact is not likely to be very great.”
CORN: March corn futures pushed above last week’s high of $6.86 overnight. Next resistance is at this month’s high at $6.88 3/4. A push above that level would have bulls targeting the psychological $7.00 mark. Near-term support is in the $6.80 1/2 to $6.74 1/2 range.
SOYBEANS: March soybean futures pushed above last week’s high at $15.27 overnight. Next resistance is at the December high at $15.37 1/2 and then this month’s high at $15.38 1/2. The 10-day moving average around $15.13 is near-term support, followed by the 20-day average near $15.05 1/2.
WHEAT: March SRW wheat futures poked above last week’s high at $7.58 overnight but failed to find active buying above that level. The Jan. 18 high at $7.60 1/4 is near-term resistance, followed by the 50-day moving average near $7.63. Near-term support starts at the psychological $7.50 level.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open the week with a mostly firmer tone, though two-sided trade is likely. Traders have bullish cash cattle hopes for the week. Packers started raising cash cattle prices late Friday, though traders will have to wait until later today to get the official average cash price and sales volume for last week. It appears packers will need to be more aggressive in their pursuit of cash cattle this week after dragging their feet over the past month. But they will have fresh contract supplies available with the flip of the calendar, which would limit their aggressiveness in the negotiated market this week. Wholesale beef prices have started their seasonal decline, with Choice down 99 cents and Select 94 cents lower on Friday. April live cattle futures remain in the long-term uptrend. Near-term support extends from $160.20 to this month’s low at $158.55. Near-term resistance extends from $160.95 to the contract high at $162.75.
HOGS: Lean hog futures are expected to open the week with a mostly firmer tone amid signs the cash index has posted a seasonal low. The CME lean hog index is up 12 cents to $72.64 (as of Jan. 26), marking the third straight daily increase. That’s the first time the index has been up for three straight days since Dec. 12-14. February lean hog futures finished Friday $3.235 above today’s cash quote. April hogs finished at a $13.81 premium. The pork cutout value fell $1.21 on Friday, though movement stayed active at 323.5 loads. Friday’s high at $88.325 is initial resistance for April lean hog futures, with stronger resistance at the November/December double-bottom at $89.10. Near-term support starts at the 10-day moving average near $86.135 and extends to last week’s low at $83.70.
