Ahead of the Open | February 2, 2023
GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 6 to 10 cents higher.
Wheat: 2 to 4 cents higher.
GENERAL COMMENTS: Soybeans traded higher throughout the overnight session, while corn and wheat firmed late after two-sided trade. We expect the late overnight price strength to carry over to this morning’s reopening. Outside markets will have little influence, with crude oil futures just mildly weaker and the U.S. dollar index trading near unchanged.
Rain in Argentina overnight was greatest in Cordoba and in central through south-central Buenos Aires with areas in between the two areas staying mostly dry. World Weather Inc. says Argentina will see 10 days of net drying once rain ends today. Northeastern Argentina will continue to have the most threatening weather with top and subsoil moisture already exhausted and no rain for at least 10 days. Rain chances are expected to improve near mid-month for Argentina, but World Weather says it is still debatable how significant that moisture may be.
In Brazil, western Rio Grande do Sul will also be dry with not much moisture likely over the next 10 days to two weeks, resulting in rising crop stress. Recent drier weather in Mato Grosso and areas southeast into Minas Gerais and Sao Paulo may soon translate into better soybean maturation and harvest conditions with accelerated safrinha crop planting as well. Rain is expected from Sao Paulo to Mato Grosso do Sul this weekend into next week and some of that will be abundant, slowing or stalling fieldwork for a while. Northeastern Brazil will see the least precipitation.
World Weather says “GFS (American) model is still trying to bring significant rain and snow into the central and southwestern U.S. Plains next week, but the European model keeps precipitation rather limited.”
Export sales for the week ended Jan. 29:
Corn: Net sales of 1.593 MMT greatly expected expectations ranging from 600,000 MT to 1.2 MMT. Sales increased 75% from the previous week and up notably from the four-week average. “Unknown destinations” was the biggest buyer at 423,100 MT, but Mexico (323,600 MT) and China (319,500 MT) were also noted buyers.
Soybeans: Net sales of 736,000 MT were down 36% from the previous week and 18% from the prior four-week average. Sales were also at the low end of pre-report expectations ranging from 700,000 MT to 1.3 MMT. China purchased 782,400 MT of U.S. soybeans during the week.
Wheat: Net sales of 136,400 MT were down 73% from the previous week and 51% from the four-week average. Sales were well below the expected range of 300,000 to 600,000 MT.
CORN: March corn futures found support at the 10-day moving average around $6.88 overnight and pushed above the 5-day average. Near-term resistance is at $6.88 1/2 and $6.88 3/4. Near-term support is at yesterday’s low at $672 3/4, which lines up with the 20-day moving average.
SOYBEANS: March soybean futures posted an inside day up overnight. Near-term resistance starts at yesterday’s high of $15.42 3/4 and extends to the January high at $15.48 1/2. Yesterday’s low at $15.10 3/4 and the 20-day moving average around $15.10 are near-term support.
WHEAT: March SRW wheat futures pushed above the downtrend drawn off the October and November highs overnight. The overnight high at $7.70 3/4 is initial resistance. Bulls must clear the December high at $7.99 to signal a market bottom. Near-term support extends from the 5-day moving average at $7.57 1/2 to the 20-day average at $7.44 3/4.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Choppy.
CATTLE: Cattle futures are expected to open with a weaker tone amid followthrough from Wednesday’s poor finish. If early technical-based followthrough selling is active, futures could sharply extend yesterday’s declines. But buyers may surface under the market as long-term fundamentals are bullish. Today’s price action in futures could ultimately impact this week’s cash cattle trade. Cash cattle trade has been slow to develop again this week. Packer bids have been limited as they drag their feet in hopes of getting cattle bought at lower prices on Friday. Feedlots are in no hurry to move any more animals than necessary unless packers raise bids, suggesting trading volume could be light again this week. Wholesale beef prices dropped Wednesday, with Choice $1.02 lower and Select down 14 cents. The Choice/Select spread narrowed to $12.29. USDA reported net beef sales totaling 25,200 MT for 2023.
HOGS: Lean hog futures are expected to open with a mixed tone. Futures faced moderate to heavy selling pressure on Wednesday but worked well off their session lows by the close. That suggests corrective buying could be seen this morning, especially if followthrough seller interest is light. Traders are still waiting on strong signs the cash market has posted a seasonal low. After four days of gains, the CME lean hog index has posted two days of declines, falling 7 cents to $72.51 (as of Jan. 31). February lean hog futures finished Wednesday $1.465 today’s cash quote, while the April contract had an $11.79 premium. Those premiums will likely limit buyer interest in hog futures. The pork cutout value fell $1.30 yesterday as all cuts except loins dropped. Movement was solid at nearly 316 loads. USDA reported net pork sales of 30,900 MT for 2023, primarily to Mexico (15,100 MT). China was not on the buyers’ list.
