CORN
Corn futures eased from new highs overnight. May corn is down 3-1/2 cents 6.69 this morning, and Dec is unchanged at 6.05-3/4 after eclipsing Tuesday’s contract high of 6.06-1/4 by 1/4 cent. On Tuesday, Managed funds were net buyers of 23,000 corn, and are now estimate long 324,000 contracts. Though sharply higher, look for choppy trade to ensue ahead of this week’s U.S. Outlook conference. U.S. weekly corn export inspections were a season high, but total exports are down 11% from last year. Weekly Export Sales will be out on Friday morning. As the focus shifts to Brazil’s second corn crop, the weather has turned friendlier as planting progresses. Outside markets show the dollar weaker and choppy, crude down slightly after posting new highs on Tuesday, and stock index futures up 180 points following a big drop to start the week.
SOYBEANS
The soy complex was in the black again overnight with May beans up as much as 17-1/2 cents to a new high of 16.43-1/2 before trimming gains. November beans rose 11-3/4 cents to a new high of 14.85. Soyoil is making new highs, as well; And, Dalian palmoil futures are at all time highs. In meal, the potential ‘blow off’ top from a couple weeks ago still looms over that market, but the bullish tone for commodities has helped avoid a major sell off. May meal is up 2.80 per ton to 453.60 this morning. On Tuesday, Managed funds were net buyers 18,000 soybeans, 3,000 soymeal and 8,000 soyoil. The are now estimate long 184,000 soybeans, 91,000 soymeal and 77,000 soyoil. Rains are forecasted for the east half of Argentina and Southern Brazil. Drier weather should help central and northern Brazil soybean harvest.
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WHEAT
Wheat futures are weaker this morning. May Chicago wheat is down 3 cents to 8.49-1/2. May KC futures are down 6 to 8.81; And, May MPLS spring wheat is down 1-3/4 to 9.86. On Tuesday, Managed funds were net buyers of 18,000 Chicago wheat, and are now estimate to be short 25,000 contracts. Wheat may follow the latest headlines concerning Russia and Ukraine. After tensions came to a head over the weekend, most grain and energy markets started the holiday-shortened week sharply higher. Without tensions in the Black Sea, wheat may have become overpriced due to growing world numbers. However, dryness in the U.S. Plains into spring should keep weather premium in place.
CATTLE
Cattle futures are called steady to lower. Prices may be reaching winter highs, and a potential pull back may be at stake as charts turn more negative. Despite holding support on the April contract on Tuesday, price action is soft at the bottom of the $3.00 trading range, and testing support at the 20-day moving average. April price has traded within this range for the past 15 days. A potential head and shoulders pattern is still forming on the chart, but prices held the bottom of that pattern on Tuesday. February cattle contracts expire on the 28th and is directly tied to the cash market. Cash trade was undeveloped to start the week, but asking prices were firmer at $144-145. Bids were still undeveloped, but the market is anticipating a firmer trend overall. Retail values have been trending lower, and could be getting close to a seasonal low. At the close, boxed beef prices were mixed, (Choice: -2.45 to 261.64, Select: +1.80 to 263.64) with demand light at 117 loads. The weaker demand tone is noticeable in the Choice/Select spread, which has turned to a negative 2.00 with the strength of Select beef versus Choice. Weekly beef production was up by .9% to 559 million pounds last week, as slaughter ticked higher. The additional product only helped pressure retail beef prices. Feeder cattle finished lower, limiting gains in the live market, as a strong surge in gain market offered pressure.
HOGS
Hog futures are called steady to higher. Prices closed at new contract highs yesterday, opening the door for more money flow and a challenge of the longer-term trendline highs, but the market is over-bought with the end of the month nearing. It has been a historic run higher for April hogs, which have gained more than $25.00 since the start of the year to get above the $110.00 level and may be targeting long-term resistance near $116 as the contract heads for uncharted territory. Pork cutout values are still trending higher. Prices were firmer at midday, but closed lower, losing 1.33 to 108.76. The load count was moderate at 314 loads, and the expensive primal loin cut despite Tuesday’s weakness, shows strong historical strength as that cut has added $9.00 of value over the past week. Cash was supportive with the National Direct morning trade a weighted average price of 83.64. The Cash Lean Hog index gained 0.99 to 95.23, and April futures are trading at a $16.84 premium to the cash index, which should be a limiting factor. USDA cold storage report on Tuesday afternoon saw a build up of pork supplies. Frozen pork supplies were up 8% from the previous month but down 6% from last year. Stocks of pork bellies were up 17% from last month and up 43% from last year, reflecting a slower export demand tone for the start of 2022.
Author
Matthew Strelow