CORN

Corn futures traded lower overnight.  March corn had an 8 cent range between 5.32-3/4 and 5.24-2/4 while trading entirely below the contract’s 10 and 20-day moving averages for the first time in more than 2 months.  Trade volume has begun to shift to the May contract which is trading near 5.30.  Next support is near 5.20, then 5.00.   Funds were net sellers of 55,000 contracts mid-week.  Dec corn was down as much as 7 cents to a 2-week low of 4.41 before trimming losses.  Trade estimates for this morning’s USDA Weekly (old crop) Export Sales are 800,000 to 1.40 mil tons.  New crop sales have a range of 200,000 to 400,000 tons.  Weekly U.S. ethanol production was slightly above last week but still below last year.  Stocks were below last week and last year, and margins remain negative.

SOYBEANS

Soybean futures traded two-sided overnight and were most recently firmer.  March beans traded an overnight low of 13.37-1/4 before climbing to a session high of 13.59-1/4.  Nov beans are up 2 cents to 11.65-1/2 with an overnight range spanning 11.66-1/4 on the high end down to 11.51-3/4.  Trade estimates for this morning’s USDA Weekly (old crop) Export Sales are 300,000 to 750,000 tons, down from last week’s total was 824,000 tons.  New crop sales have a range of 50,000 to 300,000 tons.  Meal and soyoil sales are expected to be 150,000 to 350,000 and 5,000 to 30,000 tons, respectively.  The market could be stalling out on ideas that China may be done buying U.S. old crop soybeans for now.   In South America, conditions across much of Brazil’s key production region will continue to be favorable.  Argentina is to experience net drying through next Wednesday from La Pampa into Santa Fe.  There will be some erratic rain which will at least slow the drying a little; however, some crop stress may increase, especially in La Pampa where conditions have been drier.  Critically dry conditions are still not expected though.  Last evening’s GFS model run continued to show greater rainfall for Argentina in the second week of the outlook compared to the first week.

WHEAT

Winter and spring wheat futures were mixed overnight within 6 to 7 cent trading ranges.  Prices are slumping to the lower half of their respective trading ranges, lacking the punch to make a run at the January highs.   The nearby May contracts hold the bulk of the open interest in the complex.  May Chicago wheat, at 6.44 traded below last weeks low while testing the 50-day moving average near 6.30.  Prices have not traded below the 50 day since Dec.  It’s a similar story for May KC which is consolidating between the contract’s 10/20-day moving average(s) resistance up near 6.33 and 50-day support just above 6.00.  May Mpls Spring wheat is at 6.33 and in the beginnings of sideways pennant formation on the daily and weekly charts.  Look for the complex to remain under the influence of movement in row crops and the dollar, which has bottomed out for the time being.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 450,000 tons.  Overnight, Jordan bought 60,000 tons of optional-origin wheat.

CATTLE

Cattle futures are called steady to lower after live cattle contracts experienced a bit of a breakdown yesterday following Tuesday’s key reversal from new highs.  Cold weather remains supportive from a weight-gain standpoint, but unhealthy as far as short-term demand.  April futures are trading a $10 premium to cash and heavy delivery notices are weighing on the nearby contract.  Yesterday’s Fed Cattle Exchange saw about a third of the pens go for $114 versus most asking prices are at $116. Packers may be unable this week to hold gains to a dollar.  Feeders are getting a bid underneath the market from slumping feed markets.

HOGS

Lean hog futures are called steady to higher, supported by strong demand tone and technical buying.  We view the market is due for some caution going into the weekend, though after moving into an over-bought condition, opening the door for some profit taking.  February hogs expire tomorrow, and are holding a premium to the cash index, which may limit upside.  For now, this morning’s weekly export sales are expected to stay supportive and could set the tone for the day.  Retail carcasses finished 1.50 higher to $86.86 on 278 loads.

Author

Matthew Strelow