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Soybeans, Corn Dive on Argentine Forecasts; Brazil Harvest Pressure

Soybean futures were slammed in overnight trading by pressure from wetter forecasts for Argentina and prospects for Brazil’s huge harvest to start picking up speed soon. Corn futures were also pressured by improved Argentine rain prospects. Wheat futures have followed corn and soybeans lower amid limited export demand for U.S. wheat, although weekly export sales were better than expected. Cotton futures have sold off to new lows under pressure from grain/soy price weakness, a firm dollar and weaker crude oil futures.

Corn futures were mostly 3 1/2 to 5 1/4 cents lower at the end of early trading, with soybean futures mostly 10 1/4 to 15 cents lower, while wheat futures mostly ranged from 4 1/4 to 9 1/4 cents lower. Cotton futures are 47 to 65 points lower.

Looking at other markets, U.S. crude oil futures are 24 to 32 cents lower amid reduced concerns about Middle East oil supplies following news of a ceasefire agreement between Israel and Hamas. However, there is uncertainty about that ceasefire as Israeli airstrikes reportedly killed upwards of 70 people in Gaza overnight after the agreement was announced. Israel has accused Hamas of backtracking on the agreement. Crude oil losses have also been limited by ongoing supply concerns amid tightening U.S. crude stocks and new U.S. sanctions.

The dollar index is slightly firmer this morning after sliding to a 5-session low on Wednesday in reaction to the latest U.S. inflation data. The dollar has found support from apparent safe haven buying as have Feb. gold futures, which are $28.10 higher.

Based on stock index futures data, U.S. stock markets appear set to open narrowly mixed this morning after surging on Wednesday in response to U.S. inflation data. Asian stock indexes rose in Thursday trade, while major European stock indexes are higher in afternoon trade.

U.S. retail sales for December were up 0.4% from November, coming up short of the avg. trade estimate for a gain of 0.5%. This may add to hopes for further Fed interest rate cuts. Weekly U.S. unemployment claims came in at 217,000, topping the avg. of expectations at 210,000 and the previous week’s revised total of 203,000, which will also support rate cut hopes.

Going into this morning, this has the look of a “sell everything day” in agricultural futures. The question is whether further selling interest will emerge or traders will buy the break.

Soybean futures have traded to 4-session lows overnight, with Mar. soybeans falling back against nearby chart support at $10.24 1/4 after establishing nearby resistance at $10.42 3/4. The market’s 10-day moving avg. now at $10.17 1/2 is the next possible support.

Corn futures ended early trade near their session lows. Nearby Mar. futures held inside of their Wednesday trading range overnight, but July futures slipped to a 3-session low. Mar. futures have nearby chart support at $4.74, with resistance at $4.79 1/2.

Today’s South American forecast model runs seem to be showing a more unsettled weather pattern across Argentina, southern Brazil, Paraguay and Uruguay. If this pattern verifies rain will fall more frequently and significantly over time bringing adequate relief to protect Argentina’s production potentials. Both the European and GFS model runs are on board with this today.

Net U.S. corn export sales for the week ended Jan. 9 came in at 40.3 mil. bu., topping trade expectations that ran 19.5-39.5 mil. bu. and the previous week’s sales of only 17.5 mil. bushels. Although sales were slightly above expectations, they are not likely to excite price bulls. Weekly corn export shipments of 34 mil. bu. were down from 39.5 mil. a week earlier.

Net weekly U.S. soybean export sales came in at 20.9 mil. bu., in line with trade expectations that ran 11.0-33.0 mil. bu. and moderately above the previous week’s sales of only 10.6 mil. bushels. The soybean sales total is likely to be viewed as evidence of fading demand for U.S. soybeans ahead of Brazil’s harvest. Weekly soybean export sales of 58.1 mil. bu. were down slightly from the previous week’s 62.6 million.

Net weekly U.S. wheat export sales were better than expected at 18.9 mil. bu., compared with trade expectations that ran only 3.5-14.5 mil. bushels and the previous week’s sales of just 4.1 million. The sales total may underpin wheat futures against further selling interest. However, weekly U.S. wheat export shipments fell to just 7.2 mil. bu. from 15.2 mil. a week earlier.

USDA announced this morning that exporters have sold 132,000 MT of U.S. soybeans to China for 2024-25 delivery, which is the third sale to China announced this week. USDA also reported exporters have sold 135,000 MT of U.S. corn to Taiwan for 2024-25 delivery.

Midwest corn basis bids are mostly steady this morning amid the futures weakness. Soybean basis bids are steady to weaker again, though, with the spot basis at Cedar Rapids, Iowa 5 cents weaker at 25 under Mar. futures.

Wheat futures largely took direction from corn market weakness overnight. Nearby Mar. SRW wheat futures slid to a 3-session low of $5.38 1/2 overnight and finished early trade near that low despite the stronger-than-expected weekly wheat export sales. The market is sitting right on its 10-day moving avg. and the next support is at last week’s price lows at $5.26-$5.28 1/2.

A current lack of weather threats to wheat production around the world will help limit buying interest in the wheat market. Although the coldest air of the winter so far is set to descend on the U.S. Plains Sunday through Tuesday morning following a brief warmup, there is limited concern about winterkill damage as light snows should preceded the cold wave over the weekend, providing protection for winter crops.

Meanwhile, weather remains warmer than usual across Russia’s Southern Region and Ukraine and there is no threat of winterkill damage there over the next couple of weeks. Some precipitation is likely, which will be of use to crops next spring.

Winter grain crops in the European Union are mostly in good condition, helped by moderate weather so far this winter, and the bloc remains on course to recover from last year’s rain-hit harvest despite still soggy fields in France, analysts and producers told Reuters News Service. French analyst Strategie Grains said in a monthly report on Thursday that conditions for EU winter wheat and barley were satisfactory.

Weekly U.S. cotton export sales were strong at 316,200 running bales for 2024-25 delivery and 1,300 bales for 2025-26, up from week-earlier sales of just 137,400 bales for 2024/25. The sales total should help limit further selling in the cotton market.

Livestock futures may start out mixed this morning amid support from technically-driven buying and firm cash markets, and pressure from overnight weakness in grain/soy futures. Weekly U.S. pork export sales of 30,300 MT look neutral for hog futures. Net weekly beef export sales of 9,700 MT may be a negative cattle market factor, but live cattle futures should be underpinned by strong Plains cash cattle markets and concerns about tightening U.S. supplies.

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