TFM Daily Market Summary 02-13-2023


The trend in soybean inspections is showing that our export window may be closing given the pressure from the fresh supplies in South America.  Last week’s export inspection total for soybeans hit 1.555 MMT, which was the lowest weekly inspection total in the past 5 weeks and down 400,000 MT from last week.  Historically, soybean inspections totals will decrease from now until May as the Brazil soybean export program kicks in with fresh supplies.  Regarding export sales, the last reported sales for old crop soybeans was on January 25.  Price rallies may be difficult to maintain if the market is perceiving that demand for U.S. soybeans may become more limited in the weeks ahead.

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CORN HIGHLIGHTS: Corn futures firmed today, gaining 4-1/2 cents in March to lead futures higher, closing at 6.85. December added 0-3/4 to close at 5.96-3/4. March is closing in on the high from January 18 at 6.88-3/4 and is up against the upper Bollinger line, which is acting as resistance. Support comes from concern the Brazil second crop planting is less than hoped for, as well as higher wheat and soybean prices. March wheat futures has gained 70 cents since Jan 23. Adding additional support is less than ideal weekend weather in Argentina with hot temperatures suggesting a further downgrade to the crop.

Export inspections were slow at 20.1 mb last week. This brings the year-to-date total to 514 mb, or down 35% from a year ago. All attention is focusing on South America and Brazil’s soybean harvest and planting progress of the Safrinha crop. AgRural, an agricultural consultancy in Parana, Brazil indicates the second crop planting is 25% complete verses 42% last year. A few things to note, last year was drier and planting moved rapidly along. Also, acreage is up this year, so it will take more time to plant the crop. Today’s close was encouraging for bulls as prices closed near the high of the day for the second consecutive session. Also encouraging is that prices firmed despite a low inspections number. Moisture forecasted for much of the central Midwest is shrinking the drought map. It is February, however, and many who went into early winter dry have had soil moisture replenished. This might suggest that more normal type conditions for planting and growing could exist this year.

SOYBEAN HIGHLIGHTS: Soybean futures closed slightly higher today, but backed off from big gains earlier this morning that came close to taking out the 7-month high in the March contract. The fuel for the rally came from a very dry Argentine forecast over the weekend, but tensions with China over balloon-gate may be adding some downwards pressure. Mar soybeans gained 1/4 cent to end the session at 15.42-3/4, and Nov gained 6 cents at 13.84-3/4.

Over the weekend, weather forecasts for Argentina and southern Brazil came out showing less than needed rainfall over the next 10 days, which set soybeans and bean meal on a sharp rally on today’s open. March soybeans nearly took out their 7-month high, while March meal made new contract highs as supplies of Argentine meal exports remain a concern and fuel bullish sentiment. In about 10 days the weather in Argentina should begin to cool off and receive more rain, but it will likely be too late. While South American weather has been a bullish story, the four objects that have been shot down over North American airspace that are believed to be from China has had a bearish effect as already high tensions increase even more. China is unlikely to buy many more soybeans from us during this marketing year though, in favor of cheap Brazilian beans, which are estimated to be 17% harvested. Today, the USDA said that 57.1 mb of beans were inspected for export last week, which was a solid number and raised total inspections 2% from a year ago. The US now only needs another 174 mb of sales to reach the USDA’s goal for the season. Crush margins have also gotten more profitable with the rise in meal, adding to domestic demand. March beans are in an uptrend and briefly moved above resistance at 15.50 this morning.

WHEAT HIGHLIGHTS: Wheat futures defied early weakness to close with decent gains. It is likely that more short covering is going on, but the Commitments of Traders report has not been released for two weeks, making it difficult to know for sure. Mar Chi gained 6 cents, closing at 7.92 and Jul up 3-1/2 at 8.02-1/2. Mar KC gained 3-1/4 cents, closing at 9.12-1/4 and Jul up 3 at 8.85-1/4.

Friday’s news about Russian missiles turned out to be an overreaction; the missiles were found not to have violated NATO airspace. However, concerns still exist around the escalation of the Russian offensive. Ukraine is said to be holding their ground and ships are still being loaded for export in any case. Russian wheat does remain at a significant discount to US wheat as they continue be the export leader. This week’s inspections data for wheat was ok with 17.4 mb said to be inspected. This brings the total 22/23 inspections to 525 mb and the USDA is still estimating exports at 775 mb. On a bearish note, parts of the US southern Plains will receive precipitation over the next 24 hours or so. The areas expected to get the most moisture are southeast Nebraska and northeast Kansas. While it may not be a drought-buster, it will still be welcomed and there are chances for more next week. In other news, the Philippines are said to be tendering for 110,000 mt of feed wheat, but Australia is expected to be the origin. And as a final point of note, a fourth high altitude object has reportedly been shot down. It is currently unclear as to what it is or if it is of Chinese origin. However, rising tensions with China could affect the markets as a whole.

CATTLE HIGHLIGHTS: Live cattle futures started the week with moderate to strong gains supported by an improved cash market tone and talk of packers looking for cattle in the upcoming week.In addition, a firmer tone in retail beef brings more optimism to the cash trade. February cattle were 1.0752 higher to 162.275, and April cattle added 1.150 to 165.100. In feeders, March feeders gained .800 to 187.200.

Late cash trade last week came in with a firmer tone, and that helped push cattle markets to new contract highs for April and Feb.  Southern trade was $1-2 higher, and northern dress trade was $4-5 higher versus last week’s total.  Talk that packers are looking for cattle this week to meet current needs  will keep the optimism in the cash market.  The cash market will likely be the driver in the cattle futures prices in a window where prices are seasonally challenged.  For Monday, cash trade was undeveloped, typical for the start of the week.  In the retail market, a firming choice market has helped support cash optimism.  Choice carcasses gained $4.51 last week, and were firmer at midday.  Choice carcasses added.64 to 270.30, and Select was 1.90 higher to 256.19.  The load count was light at 54 loads.  Feeder cattle saw two side trade, influenced by grain and live cattle prices.  The stronger tone in live cattle prices out-weighed the firmer corn market tone.  Feeder Cattle Cash Index traded up .24 at 183.33.  Overall, the cattle market is well supported by the lack of cattle supplies and a potentially firming cash market. Even if the market were to see some pullback, the longer-term story is still friendly.

LEAN HOG HIGHLIGHTS: Lean hog futures were mixed to strongly higher on the session as the deferred futures saw some short covering, but Feb hogs, with expiration on Tuesday, stayed tied to the cash market. Feb hogs slipped .050to 75.825, but April hogs saw strong gains, adding 3.025 to 86.350.

The volatility picked up in the hog market on Monday as the February contract is expiring tomorrow.  The hog market saw good money flow out of short positions, pushing the deferred contract to strong triple digit gains.  The concern will still be the premium of the futures to the cash market.  April will be the new lead month this week and hold a $12+ premium to the cash market.  That could be a limiting factor, but at least the cash market is trending in the right direction. The Lean Hog Index gained .21 to 74.01, continuing its slow climb higher, reflecting an improving cash market. Direct cash hog trade at midday was 2.07 lower to 74.05.  Direct trade was firmer throughout last week, so today’s price movement is a concern to see if it is a trend. Retail values were 2.02 higher to 83.07 with movement of 130 loads. Retail values seemed tied to the $80 area and can’t break away from this point.  With today’s midday strength, the afternoon retail close will be key. The pork cutout index traded .34 higher to 80.09. It will still take the fundamentals to sustain any rally; at least cash is starting to try and help. if the retail market, which has been stuck in a sideways range, could begin to move higher, that would be a help to prices.  The market may stay choppy with February expiration on Tuesday, even though the technical picture did see some improvement on Monday.

DAIRY HIGHLIGHTS: During last week’s trade, second month class IV milk futures recovered 33c after gaining 55c the week before. Buyers are supporting the market higher once again after letting the market fall for about 10 weeks straight. The reason for the turnaround is the fact that spot butter and powder are trying to change trends and work higher off of recent lows. So far in February, spot butter is up 13c, while spot powder is up 11.25c. This is in line with the demand that has returned to the global markets and the recent GDT event. Dairy futures here in the US had been extremely oversold, so the question now remains whether this is a correction higher or if the market has bottomed and will begin a new uptrend. It’s still too early to tell. Fundamentals remain mixed with high feed and fuel costs, a steady to lower US cow herd, and slightly higher production year-over-year along with a weaker global market and sluggish economy. For now, the dairy trade remains in a downtrend until significant resistance is taken out.

Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.


Bryan Doherty

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