CORN

Corn futures were unchanged overnight within a constructive looking saucer bottom forming over the past two-weeks along 10 and 20-day moving average support.  The dollar has continued to plunge lower, down another 51 basis points overnight to new lows, thus giving U.S. commodities the value edge over other suppliers in the world marketplace.  Momentum studies have begun to trend higher giving corn a positive set-up for finishing the week with good gains.  March corn futures, at 4.27 peaked at 4.29-1/4 for the week on Wednesday and is targeting the contract high of 4.39-1/2 from Nov 30.  Fundamental support from dwindling South American production estimates favors the bulls long corn and following the trend in the soybean market.  Managed Money’s net long corn position has grown to an estimated 292,000.  Trade estimates for this morning’s USDA Weekly Export Sales are 800,000 to 1.60 mil tons versus 1.362 mil last week.

SOYBEANS

Soybean futures were unchanged overnight while holding mid-week strength below the key $12 mark.  Strong demand for bean products coupled with dry weather in Argentina and a port strike tied to inflationary conditions demeaning workers’ wages help give the complex the edge needed to try to breakout to the upside.  Conditions will still be favorable for crop development in most of Brazil.  There will be some pockets that are drier than preferred, such as in southern Rio Grande do Sul, northeastern Bahia, and possibly some of western Mato Grosso do Sul; however, the bottom line is good for much of the crops.  In Argentina, a very important rain event is still expected Friday which will impact southern, central, and northeastern production areas of the region. Some pockets of Buenos Aires and far western production areas of the region will get disappointing amounts; however, the rain will at least lead to some temporary reduction in dryness concerns.  Huge improvements are not expected in the next two weeks and dryness in week 2 of the outlook will lead to some increase in crop stress, especially in the pockets that miss out from much rain this week.  Meanwhile, trade estimates for this morning’s USDA Weekly Export Sales are 400,000 to 900,000 tons versus 569,000 last week.

WHEAT

Winter wheat futures were up as much as 5 to 6 cents overnight, underpinned by new lows in the dollar and dryness in the U.S.  In addition, many traders believe in a smaller Russian wheat crop than reported by USDA.  Technical maneuvering seems to be the theme for the wheat complex heading into the end of the week as prices settle into another range of consolidation after some early-month price discovery to the downside fueled by Russia’s on-again, off-again export tax news.  For now, prices in Chicago and KC are trading above near-term moving averages giving the markets a bullish tilt that could reinforce a move to the up-side if resistance levels are taken out.  Traders long March Chicago wheat, at 6.03 face the next upside target objective at 6.16-1/4.  March KC wheat, at 5.64 has a triple top near 5.90.  Mpls spring wheat contracts are following suite sandwiched between their 100-day moving average support levels and 200-day resistance.  Trade estimates for this morning’s USDA Weekly Export sales are 250,000 to 650,000 tons.  In tender activity overnight, Tunisia bought 117,000 tons of optional-origin soft wheat, 100,000 tons of durum; and,  100,000tons of barley.

CATTLE

Cattle calls are for mixed to higher following a nice round of technical buying that pushed Fed cattle to its highest level in 2 weeks.   June through Dec cattle made new contract highs on ideas that Friday’s Cattle on Feed report will confirm tight placement numbers.  Trade estimates have begun to emerge at around 91.5%; On-feed at 100%; and, Marketed at 98.1.  The data will be released tomorrow after the market closes.  Cash trade is starting to develop for the week at $105 in very light trade, down $3-5 under last week.  Though not yet a trend for the week, sellers will have to work hard to get back to steady.  Many asking prices are at $110, and higher futures could tighten resolve.  Choice carcass finished 1.60 lower as Choice to 207.22 and Select down .11 to 192.09.  Good support should be in the $200-210 range. Product movement has been good, a signal of good carcass values.  Weak retails will weigh on prices in the front months.  Feeders are seen mostly higher above $140 on talk of strong cash markets and technical buying supporting futures.

HOGS

Lean hog calls are steady to lower after the market failed to see follow through strength from Tuesday and instead sold off sharply to start the day.  Firmer midday retails and strength in hams offered support and lifted prices off their lows.  Look for this morning’s weekly export sales to set the tone for this morning’s open.  Heavy pork production and a large slaughter run limits upside potential.  Wednesday slaughter stayed heavy at 483,000 head, but under last week.  The CME Lean Hog Index was higher by .10 to 65.06.  Feb is trading .91 over the index, which may also limit upside potential.  Retail values are trying to find a bottom.  Ham prices were strong on Wednesday, bringing value to the wholesale pork trade.  However, the futures market looks technically weak, and the fundamental picture needs to improve to bring buying into the market.

Author

Matthew Strelow