Market Snapshot | January 23, 2023

Livestock producers: Cover corn-for-feed, soymeal needs through February… Corn and soymeal futures are trading below our targets for extending coverage. We advise livestock producers to cover all corn-for-feed and soymeal needs in the cash market through February. Be prepared to further extend coverage on additional price pressure.

Corn futures are 10 to 12 cents lower at midmorning.

• Corn futures are following the soy complex lower after beneficial rains in Argentina.
• Argentina experienced expanding rains over the weekend in central, southern and some northern areas of the country where improvements in crop conditions resulted, while excessively hot and dry conditions continued for a large part of northern Argentina, according to World Weather Inc.
• Russian Foreign Minister Sergei Lavrov said terms of the Black Sea grain initiative were “more or less being fulfilled,” though Lavrov also stated Russia still faced problems exporting its own agricultural products.
• USDA’s corn export inspections for week ended Jan. 19 totaled 727,643 MT (28.6 million bu.), which was down 52,145 MT from the previous week, but was within the expected range between 550,000 MT and 1.025 MMT.
• March corn plunged below the 10-day moving average around $6.69 1/2, touching off sell stops. The 40-day moving average at $6.61 1/4 is next support, while initial resistance stands at the 100-day moving average near $6.74 1/2.

Soybeans are 19 to 23 cents lower, while March meal futures are around $4.50 lower and March soyoil is about 30 points lower.

• Soybeans are lower for the fourth straight session as supply concerns ease following widespread rains in Argentina’s parched growing areas.
• Argentina received enough rain late last week and during the weekend to provide temporary improvements to topsoil moisture, though more will be needed to break the drought pattern. World Weather Inc says Argentina will receive more rains over the next week to 10 days.
• USDA reported a daily export sale of 192,000 MT to “unknown destinations” during the 2022-23 marketing year.
• China’s markets are closed this week as the country celebrates the Lunar New Year holiday, with other Asian markets also closed for varying periods in observance of the Lunar New Year.
• Brazilian based consulting firm AgRural trimmed its Brazilian soybean crop estimate by 700,000 MT to 153.9 MMT amid cuts to production in Rio Grande do Sul, Parana and Mato Grasso do Sul.
• Regular rain across much of Brazil and Paraguay the next two weeks will keep crop conditions favorable while Mato Grasso and nearby areas will see rain too frequently to allow for aggressive harvesting of soybeans and planting of safrinha corn, according to World Weather.
• Weekly inspections data revealed 1.806 MMT (66.3 million bu.) of soybeans inspected for export in week ended Jan. 19, which was near the top-end of pre-report estimates between 900,000 MT and 1.955 MMT, though it reflected a 384,627-MT decrease from the previous week. 
• March soybeans fell below the 40-day moving average of $14.84. The Jan. 5 low of $14.65 is next support. First resistance stands at $15.00 and then the overnight gap from $15.03 to $15.04.

Winter futures are sharply lower, with near 30-cent losses in HRW futures.

• Wheat futures are facing heavy selling pressure, with HRW contracts leading declines, though SRW and HRS markets are far behind.
• World Weather notes a significant surge of cold air is likely this weekend in hard red winter wheat growing areas where a close monitoring of snow cover will be warranted.
• Russia’s January exports of wheat, barley and corn are estimated at 4.1 MMT, down from 4.5 MMT in December, according to SovEcon.
• Indian wheat prices hit a new record high on Monday, following a delay in releasing extra stocks by the government to boost supplies and calm the domestic market’s supply woes.
• Weekly export inspections data showed 334,217 MT (12.3 million bu.) of wheat inspected for export in week ended Jan. 19, which was an increase of 8,574 from the previous week, and within the range of expectations ranging from 250,000 and 550,000 MT.
• March SRW futures traded as low as $8.16, breaching the Jan. 10 low of $7.20 1/2. Further support lies at $7.15, while first resistance stands at the 10-day moving average of $7.39.

Live cattle are slightly higher, while feeders are posting strong gains.

• Live cattle futures are higher on continued corrective buying following USDA’s underlying bullish data in Friday’s Cattle on Feed Report, though upside will be limited as traders wait for the cash market to develop.
• USDA’s Cattle on Feed Report estimated 11.682 million head of cattle in large feedlots as of Jan. 1, which was down 355,000 head (2.9%) from year-ago, but 30,000 head more than the average pre-report estimate. December placements dropped 8.0% from year-ago, while marketings fell 6.1%.
• Last week’s cash trade was disappointing as packers resisted paying up for cattle, though market-ready supplies are tightening and should push cash prices higher.
• Choice cutout values firmed 21 cents on Friday to $271.72, while Select rose 74 cents to $256.43.
• February live cattle traded though the 10- and 20-day moving averages, as high as $157.475, where initial resistance lies. Initial support stands at $155.95.

Hog futures lower as the nearby contract trades narrowly.

• Lean hogs lower as cash market weakness continues to pressure futures.
• The CME lean hog index is down 63 cents to $72.65 (as of Jan. 19), extending its seasonal decline.
• Friday’s corrective gains extended the premium February futures hold to the cash index to more than $5.00, which is limiting buyer interest today. Short spurts of corrective buying can be expected until the cash market marks a seasonal low.
• Pork cutout values were 42 cents higher on Friday to $79.99, though hams posted a $7.28 drop. 
• February lean hog futures remain within the previous session’s range. Initial support lies near $76.97, while initial resistance stands around $78.62.