Market Snapshot | January 12, 2023

Corn futures are 2 to 3 cents lower at midmorning.

• Corn is following wheat lower ahead of USDA’s data drop at 11 a.m. CT, though crude oil and the U.S. dollar index remain supportive.
•  USDA will release its Annual Production Summary, Supply & Demand Report, Winter Wheat Seedings and Quarterly Grain Stocks Report at 11 a.m. CT. Surprises are likely, causing big price moves considering large amounts of data will be released.
• Quarterly grain stocks have been particularly difficult for analysts to peg, especially for corn, with the range of pre-report estimates for Dec. 1 corn stocks being historically wide.
• The Rosario Grain Exchange made notable cuts to its Argentine production forecasts in the wake of the country’s worst drought in 60 years. A 10-MMT cut was made to the corn crop estimate, which is now 45 MMT.
• Conab also cut Brazilian corn production by 765,000 MT to 125.1 MMT, citing “poor distribution of rainfall” mainly in Rio Grande do Sul, though this would still represent a record crop.
• USDA’s weekly export sales for week ended Jan. 5 reported net sales of 255,700 MT for 2022-23, below pre-report estimates between 300,000 MT and 1.0 MMT. Export sales were 20% below the previous week and 62% below the four-week average.
• March corn remains cautiously within the short-term consolidation range, staying below initial resistance around $6.60 where the 20-and 40-day moving averages have nearly converged. Initial support lies at Tuesday’s close of $6.55.  

Soybeans are mostly 6 to 9 cents higher, while March meal futures are around $2.00 higher and March soyoil is 90 points higher.

• Soybeans are marking additional spillover gains from soymeal strength as Argentina is forecast to remain mostly hot and dry through at least Jan. 25.
• The Rosario Grain Exchange slashed is Argentine soybean production forecasts by 12 MMT to 37 MMT after the country has endured hot, dry weather through the planting and growing season.
• Conab also lowered its official Brazilian soybean production estimates to 152.7 MMT, down 765,000 MT from last month, though the figure still represents a record crop.
• World Weather Inc. notes recent and additional rain into Friday will leave many Argentine regions with improved conditions for crop development, but little follow-up rain and warm to hot temperatures this weekend into next, the soil will quickly dry out and increasing crop stress.
• Demand for U.S. soybean exports is waning seasonally ahead of Brazil’s expected bumper crop harvest.
• USDA’s weekly export sales for week ended Jan. 5 revealed net sales of 717,400 MT for 2022-23, within the expected range of 500,000 MT to 1.2 MMT. China was the main buyer at 676,600 MT for the week. Sales declined 1% from the previous week and were 41% below the four-week average.
• March soybean futures pushed above $15.00 overnight, with resistance standing at $15.09 1/2. Initial support stands at $14.83 1/4.    

Wheat futures are lower, led by 11- to 13-cent losses in SRW contracts.

• Wheat futures remain in a sideways to lower pattern ahead of USDA’s reports at 11 a.m. CT.
• Northern portions of U.S. hard red winter wheat areas will have an opportunity for dryness relief from a couple of weather systems expected next week and into the following weekend, according to World Weather Inc.
• Turkey’s state grain board TMO provisionally purchased some 565,000 MT of wheat in an international tender on Thursday.
• Egypt relied more heavily on Russian wheat imports last year despite a sharp drop in its imports of the grain and moves to diversify the sources of its wheat purchases, according to Reuters.
• USDA reported weekly net sales of 90,800 MT of wheat for week ended Jan. 5. This was near the lower end of expectations ranging from 75,000 to 450,000 MT. Though export sales increased 93% from the previous week, they were 73% below the four-week average. 
• March SRW dipped below initial support at $7.28 3/4 for the third straight session, with additional support lying at Tuesday’s low of $7.20 1/2. First resistance stands at $7.46 1/2.

Live cattle and feeders are posting slight to moderate losses at midsession.

• Nearby live cattle are lower for the second straight session as traders await direction from the cash cattle market.
• Packers don’t want to pay more than last week for cash cattle, while feedlots are in no hurry to sell at lower prices. Unless either side changes their stance, cash negotiations could extend into Friday.
• Choice boxed beef prices dropped $3.80 yesterday as packers continue to face retailer resistance when prices reach the mid-$280 range. Though solid demand occurs when prices fall into the low-$280 range.
• USDA reported net beef sales of 13,300 MT for 2023 during the week ended Jan. 5.
• February live cattle traded as low as $156.95, dipping below initial support at the 20-day moving average around $157.08. First resistance stands at the previous session’s close of $158.11.

Hog futures are posting sizable losses, with more robust selling in nearby contracts.

• Lean hogs continue lower on persisting cash market weakness.
• The CME lean hog index is down another 48 cents to $75.96 (as of Jan. 10), extending its seasonal decline.
• Pork cutout value dropped $1.05 on Wednesday to $80.68, the lowest level since Feb. 3, 2021.
• Until cash fundamentals post seasonal lows and begin to strengthen, risk remains to the downside.
• USDA reported net pork sales of 13,100 MT for 2023 during the week ended Jan. 5
• February lean hog futures dropped as low as $77.575, violating multiple levels of support. Initial resistance stands at the previous session’s close of $80.075.