Market Snapshot | February 3, 2023

Corn futures are narrowly trading around unchanged at midmorning.

• Corn futures are choppy in directionless trade ahead of the weekend.
• World Weather Inc. notes Argentina rainfall diminished Thursday as expected and the outlook now indicated nine days of dry or mostly dry conditions with warming temperatures.
• The Brazilian government has ended a tax exemption on imports of fuel ethanol, a move that will likely crimp the U.S. ethanol industry. Ethanol imports will now have to pay a 16% tax to enter Brazil until the end of the year and is set to rise to 18% in 2024.
• March corn has dipped below the 100- and 20-day moving averages near $6.74 1/2 and $6.72 3/4, respectively, for the second straight session. This area, along with $6.71 remains an area of support, while initial resistance stands at the 10-day moving average around $6.77 1/2.

Soybeans are 4 to 6 cents lower. March meal futures are around $4.00 higher and March soyoil is around 140 points lower.

• Soybeans turned lower despite strength in meal futures, as a skyrocketing U.S. dollar weighs on commodities following stronger-than-expected jobs data. 
• USDA reported soybean export sales of 132,000 MT during 2023-24 marketing year for delivery to “unknown destinations.”
• Soymeal futures surged to their highest levels in nine years earlier as uncertainty of Argentine crop prospects loom.
• Argentina’s Buenos Aires Grain Exchange warned Thursday, that despite recent rainfall, a historic drought over the country’s core agricultural region could still negatively impact the current soybean harvest.
• There have been several days of favorable drying in Brazil that have helped to firm the topsoil or at least reduce the surplus moisture for faster early soybean maturation and harvest progress, according to World Weather.
• March soybeans are trading in a sideways, consolidated pattern between initial resistance of $15.40 1/2 and initial support of $15.25 1/4.  

SRW wheat futures are around a nickel lower, while HRW is mostly 6 to 8 cents lower. HRS futures are around 9 cents lower.

• Wheat futures are being pressured by strength in the U.S. dollar index.
• Though winter wheat seedings were up 11% from year ago, to an eight-year peak, a persisting multi-year drought is casting doubt over harvest prospects, especially in top producing state Kansas, and No. 3 producer Oklahoma.
• Agriculture consultancy, IKAR has cut its forecast for Russia’s 2023 wheat harvest to 84 MMT, down from 87 MMT previously, due to poorer weather conditions. SovEcon kept its 2023 Russian wheat crop estimate at 86 MMT, despite “challenging weather in January.”
• March SRW has traded as high as $7.76 1/2, breaching initial resistance at $7.71, before turning lower. Further resistance stands at $7.81, while initial support lies near the 10-day moving average of $7.50 1/4.  

Live cattle are mostly weaker, while feeders are mixed.

• Live cattle are mostly lower amid mild profit-taking after yesterday’s strong gains as traders wait on cash cattle trade to develop.  
• Thursday’s sharp rally in cattle futures, combined with packers’ supply needs after limited purchases recently and current feedlots, points to higher cash prices. Some sources believe cash prices may rise in upwards of $3 by the end of today’s activity.
• Wholesale beef rose slightly on Thursday, with a 3-cent gain in Choice and an 88-cent improvement in Select, further narrowing the Choice/Select spread to $11.44.
• April live cattle traded as high as $164.225, marking a fresh contract high, with initial resistance near $164.43, before mildly weakening. Initial support lies at $162.73.

Hog futures are mostly higher at midmorning, with the heavier volume April contract lagging in gains.

• Lean hog futures are extending the previous session’s gains.
• The CME lean hog index is up 34 cents (as of Feb. 1) to $72.85. That’s the largest of recent gains as the cash index works to mark a seasonal low, though traders aren’t convinced a low is in place.
• February lean hog futures are around $2.80 above the current cash quote, while April hogs maintain around a $13.00 premium.
• Pork cutout values rose $2.55 on Thursday to $81.50, which was led by over a $13.00 bounce in bellies.
• April lean hogs remain within the two-week consolidated range but are working towards resistance near the 20-day moving average of $86.85. Initial support remains near $84.58.