CORN
Corn futures were mostly lower overnight ahead of today’s 11:00 AM CT release of the March Supply/Demand report. May corn was down 8 cents to 7.45 and is up 54-1/4 cents already this month, but had light trading on Tuesday ahead of today’s report. Dec was down 3 to 6.40-3/4. A steep reversal in the wheat market is likely weighing on corn. The market will analyze the WASDE report closely, looking to see if the USDA will address any changes due to the war in Ukraine. Final Ukraine corn exports could be down 500 mil bu from USDA estimate. There are continued rumors that China is looking to buy US corn. Trade estimates for U.S. 2021/22 corn carryout are 1.479 bil bu versus last month’s 1.540 bil. Many estimates are leaning down closer to 1.20 bil bu due to higher demand, especially exports. At current price levels, corn may also be undervalued if U.S. corn export demand increases due to lower South America crop and timing of the resumption of Black Sea grain exports. In outside markets, the dollar is coming off it’s highs, down 44 points; Crude is down $3.24 per barrel, and stock index futures are bouncing 500 points.
SOYBEANS
Soybean futures broke out of their recent consolidation overnight, posting gains of as much as 44-1/4 cents in the May contract to an overnight high of 17.34. November beans rose 15 cents to 14.88-1/4. May meal got to 483.30 on gains of 10.00 after posting a record high close on Tuesday. May soybean oil made a new high at 78.58, up 2.83 with Matif and Canada rapeseed prices sharply higher. Indonesia announced new palmoil export restrictions. This and concern about World sunoil exports has palmoil futures sharply higher. A steady dose of U.S. soybean sales have also helped prop-up the soy market in recent sessions. In addition, Ag Rural made a downward revision to their Brazilian soybean crop estimate to 122.80 mmt from USDA’s estimate of 134 mmt. Brazil soybean harvest near 50%, and rains in Brazil and Argentina should be stabilizing the crops. Trade estimates for today’s U.S. 2021/22 soybean carryout are 278 mil bu vs USDA 325.
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WHEAT
Wheat futures were down hard overnight as recent buying interest dries up. May Chicago wheat is down 80 cents this morning to 12.08-1/2. May KC is down 66-1/2 to 11.33; And, May MPLS spring wheat is down 54 cents to 10.90. The complex was definitely due for a correction given the rapid rise, and when French news agency reported yesterday that Ukraine no longer desires to be a NATO member, the trade reacted with sharply lower wheat prices as the news could help peace negotiations. On Tuesday, Managed funds were net sellers of 14,000 Chicago wheat. Russia did announce they will allow for 30 cargoes of wheat and sunoil to Turkey. Russia announced ban on certain exports due to domestic shortages. Wheat futures could rally if wheat is included. For today’s WASDE report, trade estimates for U.S. 2021/22 wheat carryout are 628 mil bu vs USDA;s Feb 648 figure. Trade estimates for World wheat end stocks are near 277.6 vs USDA 278.2.
CATTLE
Cattle futures are called steady to lower. Cattle markets saw follow through buying strength on Tuesday amid choppy, two-sided grain trade. The technical picture improved as April cattle posted a higher high, and have now rallied $5.00 off Friday’s low. The 200-day moving average is overhead, and will act as a resistance barrier. Prices will need to push through the 140 level to attract more buying strength. The cash market was quiet, but started to see some trade develop on Tuesday, with Southern deals at $138, down $2 from last week. This is disappointing and could be a limiting factor for Live cattle prices, with April trading a premium to cash. Boxed beef was lower again overall last week. At the close on Tuesday, boxed beef prices were softer after a more positive tone on Monday, (choice: -2.27 to 252.44, select: -5.28 to 244.99) with demand light at 194 loads. The weak retails will limit price gains on Wednesday’s open. Traders will be watching the Choice/Select spread, trading at 6.21 at midday. The spread hit a seasonal low last month, and is poised to widen, which could support the front end of the market. The grain market traded mixed, helping support the Feeder cattle market. The Feeder Cattle Cash Index was 1.26 lower to 154.11 and trading at a small premium to the futures market, with expiration of the March contract at the end of the month.
HOGS
Hogs are called mixed. The market is making a recovery, but has a lot of work to do to push through. The fundamentals stay supportive overall, but the technical trade will likely drive the market. Futures posted triple digit gains yesterday, fueled by strong midday retail values and firmer cash market, triggering some short-covering. The April hogs held the 40-day moving average, and there is a price gap on the chart at 104.250, which is also the location of the 10 and 20-day moving averages, which could be a likely upside target. Pork cutout values were firmer. At midday, pork carcasses were 4.59 higher, but lost those gains into the close, losing -1.25 to 105.40. The load count was moderate at 297 loads. Cash has been supportive with the National Direct morning trade trending higher, there was no comparison to Monday trade, but the 5-day rolling average was at 93.30, up 1.22 on cash strength. The Cash Lean Hog Index was 0.29 lower to 99.28. The April futures jumped in value over the index with Tuesday’s rally, pushing its premium to 3.645, which could limit near-term upside.
Author
Matthew Strelow