Ahead of the Open | February 16, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 1 to 3 cents lower.
Wheat: SRW 4 to 6 cents lower; HRW mixed; HRS 3 to 5 cents higher.
GENERAL COMMENTS: Corn, soybeans and SRW wheat extended their recent losses overnight, while HRW wheat was mixed and HRS posted mild gains. Weekly export sales were strong for corn, but uninspiring for soybeans and wheat. However, USDA reported a daily soybean sale of 128,000 MT to unknown destinations for 2022-23, which may limit seller interest this morning. Outside markets shouldn’t be much of a factor for grain and soy markets as crude oil and the U.S. dollar index is both trading just above unchanged.
Export sales data for the week ended Feb. 9
Corn: Net sales of 1.025 MMT for 2022-23 increased 12% from the previous week and were 15% above the four-week average. Mexico was the lead buyer at 269,000 MT, while China purchased 126,000 MT. Sales were within the range of estimates from 600,000 MT to 1.2 MMT.
Soybeans: Net sales of 512,800 MT increased 37% from the previous week but were down 35% from the four-week average. China was the lead buyer at 283,600 MT. Sales were in the lower end of traders’ expectations that ranged from 400,000 to 800,000 MT.
Wheat: Net sales of 209,800 MT for 2022-23 increased 60% from the previous week but were 32% lower than the four-week average. Sales were near the low end of expectations ranging from 150,000 to 450,000 MT.
Brazil-based consulting firm AgRural cut its Brazilian soybean crop estimate by 2.1 MMT to a still-record 150.9 MMT due to impacts from drought in the far southern state of Rio Grande do Sul (RGDS). AgRural estimates RGDS’s crop at 16.1 MMT, down 4.3 MMT from its prior forecast. As we reported earlier this week, RGDS farmer group Aprosoja-RS says the state’s soybean crop could shrink to 12.6 MMT under a worst-case scenario. AgRural says expected high yields in Mato Grosso, Goiás and the northeastern states will partly offset losses in RGDS.
Central Argentina’s best potential rain event is today and early Friday. Rain evolved in a part of Cordoba and in a few neighboring areas of southern and western Santa Fe overnight with additional rainfall expected today. Most of Argentina’s greatest rain during the next 10 days will be in western and northern crop areas, but not in Buenos Aires, La Pampa, southern Cordoba, southern Santa Fe or portions of Entre Rios, according to World Weather Inc.
Brazil will remain too wet for the next two weeks in Parana, Sao Paulo, southern Minas Gerais and a part of Mato Grosso do Sul. Mato Grosso will see good harvest and safrinha corn planting weather the next two days, but rain will increase during the weekend and next week.
CORN: March corn futures extended declines from the past two days overnight. Near-term support is at the 40-day moving average near $6.72 1/2, the last reaction low at $6.69 1/4 and the 50-day average at $6.67 1/2. The 10- and 20-day moving averages converge just below $6.78 to form solid near-term resistance.
SOYBEANS: March soybean futures extended losses from the two previous days overnight but held above Wednesday’s lows at $15.16 1/2, which is initial support. Additional support is at the 40-day average at $15.10 1/2 and the 50-day average around $15.04. The 10-day moving average just above $15.28 is initial resistance.
WHEAT: March SRW wheat futures dropped below the 10-day moving average and yesterday’s low overnight. Near-term support is at the 20-day average at $7.57 1/2, the 40-day average at $7.56 3/4 and the 50-day average around $7.55. Near-term resistance starts at the 5-day average around $7.79 1/2.
LIVESTOCK CALLS
CATTLE: Choppy.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mixed tone in quiet trade as traders wait on active cash cattle trade to develop. So far, only light sales in the $159 to $161 range have been reported. Packers still hope to get cattle bought at steady/weaker prices, while feedlots expect firmer prices. After active trade last week, there’s a possibility this week’s volume could be light unless either side flinches. Meanwhile, boxed beef prices continued to charge higher, with Choice up $3.61 yesterday, while Select gained $2.41. Strengthening wholesale beef prices have kept packer margins in the black despite the recent rise in cash cattle prices. Net beef export sales totaled 28,100 MT for 2023, up 72% from the previous week and 34% above the four-week average. Japan (8,600 MT), South Korea (6,800 MT) and China (6,100 MT) were the lead buyers.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on support from rising cash hog prices. But Wednesday’s price action signaled weaker trade can’t be ruled out given premiums futures already hold to the cash index. The CME lean hog index is up another 44 cents to $75.62 (as of Feb. 14), the tenth straight daily gain and 14 of the last 16 it has been higher. April lean hog futures finished yesterday at a $10.88 premium to today’s cash quote. The pork cutout value dropped 94 cents but remained above the $80.00 mark, a level at which packers had been unable to sustain prior to this week. Net pork export sales totaled 45,000 MT for 2023, up 56% from the previous week and 30% above the four-week average. Mexico was the lead buyer at 18,800 MT, while China purchased 4,100 MT of U.S. pork during the week.
