CORN
Corn futures were narrowly mixed overnight with nearby March setting a 4 cent trading range between 6.23 and 6.27. Dec corn is steady at 5.72-3/4 after matching Thursday’s contract high of 5.73-1/2 as shrinking South American crop estimates underpin the market. One crop group estimates that South America corn crop losses could reach 20 mmt. In addition, there remains concern about Ukraine exports if Russia invades. Technically, corn prices are overbought which would support reversal action if it begins to occur. Informa estimated U.S. 2022 corn acres at 91.5 million versus 93.3 last year. Their 2022 corn crop is 14.999 bil bu vs 15.115 last year. This assumes a yield of 179.5 bpa vs 177.0 last year. Trade estimates for this morning’s USDA Weekly Export Sales are 600,000 to 1.40 mil tons.
SOYBEANS
Soybean futures continued to stay strong overnight, eclipsing Thursday’s new multi-month high in the March contract. 14.45-1/2, the high from June 7 is being taken out as of this writing as prices trade 9 cents higher to a new high of 14.49. Nov beans are making a new contract high at 13.45-3/4, up 11-3/4 cents as traders view South American crop shortages as a threat to the world stocks-to-use balance. Images and video from Rio Grande do Sul show soybean fields being mowed down. One group recently toured Brazil crop areas and estimated Brazil soybean crop at 124 mmt vs USDA 139, assuming that the weather pattern is changing and south Brazil should begin to see normal rains. That group estimates that South America soybean crop losses could reach 40 mmt. Soybean oil is making a new high this morning, and meal is up, as well. Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 1.30 mil tons.
WHEAT
Wheat futures are mixed this morning after ending sharply lower on Wednesday in a ‘risk-off’ session. March CBOT and KC contracts are down 1-1/2 cents to 7.93-1/2 and 8.14-1/4, respectively. March MPLS wheat is up 2-1/2 cents to 9.18-3/4. Some factors include U.S. equities turning lower after the U.S. Central Bank said they were more focused on the U.S. economy than financial markets. The dollar also turned sharply higher. Informa estimated U.S. 2022 wheat acres at 48.1 million versus 46.7 last year. Lastly, Covid and inflation may be reducing U.S. consumer food buying. Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 600,000 tons.
CATTLE
Cattle futures are called steady to higher on follow-through from Wednesday’s triple digit gains. A steady cash market, and improved technical picture are allowing money to flow into the cattle market and a recovery from the most recent push lower, as prices held support in the 100-day moving average under the April contract. After two consecutive tests of this moving average, the path of least resistance looks higher, as prices target the gap on the charts from Monday’s difficult open. Cash trade was light on Wednesday, hold mostly steady money with last week at $137. Daily retail beef values traded lower at midday as Choice carcasses lost 2.92 to 289.46 and Select dropped 3.60 to 279.72. The load count was light at 132 loads. Estimated cattle slaughter was 118,000 head, 3,000 over last week. Fear of labor shortages due to COVID variant outbreak seem to be moving past the market. Feeder charts have broken down technically, but saw moderate gains, led by the strength in the live cattle market.
HOGS
Hog futures are called mixed, supported by retail values and technical buying. However, the market is over-bought and due for a correction. The premium to the cash market may be making the hog futures market nervous. Daily direct cash trade was firmer at 62.81, trading 1.56 higher than Tuesday’s trade. The lean hog index gained .13 to 78.45, but is holding a large discount of 9.57 to the Feb futures and 18.000 to April, which could be a limiting factor. Pork demand stays relatively strong, carcass values were 2.14 higher to 94.60 on moderate to light demand of 313 loads. Summer hog contracts are pushing well above the $100 market, but consolidated at the top of the range yesterday. The strength in the hog markets has been tied to money flow and technical buying.
Author
Matthew Strelow