TFM Daily Market Summary 02-21-2023


U.S. soybean exports are on pace for a record Jan-Feb based on the current export inspection pace. The weekly export inspection released this morning reported last week’s inspections at 1.578 MMT. This was within analyst expectations, but the pace of inspections has been running toward the top end of historical highs. If this pace continues in future reports, Jan-Feb soy exports could top 14 MMT or 514 million bushels. That will likely pass the 2021 high of 13.5 MMT. This can bring some optimism to the soybean prices, but exports can tail off extremely quickly. The Brazil soybean harvest has been slowed by wet weather, and if that pace were to quicken, the U.S. soybean export window could close relatively quickly.


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CORN HIGHLIGHTS: Corn futures started firmer on the heels of higher soybeans and ended as such. Mar corn added 2-3/4 cents to close at 6.80-1/2 and Dec gained 0-3/4 to end the session at 5.96-1/2. Higher soybean futures and a dryer forecast for Argentine supported prices as did a light frost in parts of Argentina. Dry weather could impact Argentine corn pollination which is ongoing. Chinese corn prices on the Dalian Exchange are approaching two-month high levels. Double-digit losses in the wheat pit kept corn futures in check.

Export Inspections at 24.5 mb were again a disappointment. Total inspections for the 2022-23 marketing year are now 541 mb, down 37% from a year ago this same time. The USDA Outlook Forum is this Thursday and Friday. Of importance are the USDA’s initial forecast for the agricultural economy, commodity markets, trade in 2023, and U.S. farm income. The grain and oilseed outlook portion will be on Friday from 10:00 to 11:30 central. These numbers, whatever they will be, may set the tone for price direction. Most are expecting a projected carryout for the year ahead at near 2 billion bushels, up from the current market year’s 1.267 bb. For most years, the Outlook figures are generally considered as advisory and not backed by actual surveys. The next USDA Supply and Demand report is March 8 followed by the Quarterly Stocks and Acreage report at the end of March. Pockets of strong basis will continue to pull corn from farmers into the pipeline.

SOYBEAN HIGHLIGHTS: Soybean futures closed higher today as South American weather drove both soy products higher with bean oil leading the way up. Mar beans gapped higher and are back near the top of their trading range and Nov beans worked higher at their levels from December. Mar soybeans gained 21-1/2 cents to end the session at 15.48-3/4, and Nov gained 12-3/4 cents at 13.99.

The soy complex moved significantly higher today with the most obvious bullish factors being early frost in Argentina and moisture in Brazil which is slowing harvest. May beans are near their highest levels in 8 months while Mar meal is back near its contract highs. On Thursday and Friday, the USDA will hold its Agricultural Outlook Forum where they will update their initial forecasts for the 23/24 balance sheets which may be a catalyst for soybeans. The USDA has said that they are estimating planted acres at 87 million for now which would be based off a 52 bpa yield. If these numbers were accurate, it would not do much to increase the carryout and could cause a decline if the crush numbers were adjusted higher. This morning the USDA said that 58.0 mb of beans were inspected for delivery last week which puts total inspections up 4% in 22/23 from last year. For the beans that may lose out on export business to Brazil, it is possible that some of those bushels are made up by strong domestic crush demand. Currently, based off May futures, the value of crushed soybeans exceeds those of uncrushed by 3.19 a bushel, a continuous incentive for processors and another thing keeping prices elevated.

WHEAT HIGHLIGHTS: Wheat futures closed mildly to sharply lower today as the U.S. dollar trends higher and Russia may be exporting more of the grain. Mar Chi lost 15 cents, closing at 7.50-1/2 and Jul down 12-1/4 at 7.68-3/4. Mar KC lost 2-1/4 cents, closing at 9.04-1/4 and Jul down 1-3/4 at 8.81-1/2.

The Commitments of Traders report has been delayed for a few weeks now, but is scheduled to return this week. This has made it hard to judge just what the funds are doing, but today certainly felt like they were selling. Chi wheat just kept sinking lower into the close and the higher trend in the U.S. Dollar Index did not help the situation. As of this writing, it is up about 30 points to around 104.15. But U.S. futures were not alone in today’s selloff; Paris milling wheat futures were also sharply lower, with Mar down 7.50 euros per metric ton. Some of this negativity may stem from reports that Russia exported more wheat last month than they did the previous month. And in regard to Russia, the tensions between them, Ukraine, and the U.S. are on the rise. In a recent speech, Putin reportedly said that Russia will be suspending the treaty halting nuclear weapon expansion. He went on to say that Russia would resume nuclear weapons testing if the U.S. does as well – a concerning statement. This didn’t seem to play into the wheat market much today though, despite the fact that the war has been going on for a year now and will surely hamper the raising of crops in that region. In other news, cold temperatures again this week could reach down into the Texas panhandle and affect crops there. As a final note, the USDA said 14.5 mb of wheat were inspected, bringing the total 22/23 inspections to 539 mb.

CATTLE HIGHLIGHTS: Live cattle futures were supported by strong retail gains last week, the potential impact of the winter storm across the northern Plains this week, and cash optimism to push futures higher. Feb cattle were 1.175 higher to 164.750, and Apr cattle added 0.450 to 165.100. Mar feeders were firmer in a mixed feeder market, gaining 0.350 to 186.875.

Cattle market fundamentals ended last week on a positive tone as retail values gained throughout the week, and cash trade moved higher. That positive tone spilled over into the start of the week on Tuesday, supporting the cattle futures markets. Beyond the fundamentals, add in a strong winter storm across the northern Plains for the week, and the market was poised to add some premium. Cash trade last week was $159-161, adding $1-2 dollars over the previous totals. Trade undeveloped on Tuesday, but the asking price was firm at $164-plus in the south. Trade will likely hold off until the end of the week. Packers have a strong retail market to help add to bid optimism for the week. Last week, Choice carcasses were $10.00+ higher, and that trend continued on Tuesday.  Midday retail beef prices added 3.83 to Choice at 286.79 and Select jumped 2.57 to 270.62, as the demand for retail beef stays strong. The load count was light at 51 loads. Last week, beef cattle slaughter was 627,000 head, down 3,000 from the prior week, but down 43,000 or 6.5% from last year. Year to date, total slaughter is running 1.9% below last year. Feeder cattle found strength on the day, supported by the live cattle market. The Feeder Cattle Index was up 0.40 at 182.65, trading at a $4.00 discount to the Mar futures, which could be a limiting factor. Corn futures traded higher on the day, and further strength could weigh on feeder prices. Cattle futures overall look strong, fueled by the cash market being the driver, as front-month futures moved to new contract highs again on the day. Be cautious, the market is getting overbought, and may be due for some correction if the fundamentals were to cool.

LEAN HOG HIGHLIGHTS: Lean hog futures surged higher on short covering and technical buying as prices broke out to the upside. A firming cash and retail market, along with a strong winter storm forecast for the upper Midwest, helped trigger the rally. Apr hogs gained 3.825 to 89.100, and Jun hogs jumped 2.550 to 105.275.

The hog market broke out of its consolidation pattern as prices in the Apr contract broke to its highest price point since January 10 as prices surged higher. The Apr contract crossed through the 40 and 50-day moving averages, closing above those levels. This gives the market an improved technical signal which could leave more upside available to test the 100-day and 200-day moving average at 91.420.  The cash market has been building an improving base and the market may be starting to recognize this move. The Lean Hog Index added 0.56 to 76.41, but is at a significant discount to the futures, which could be a limiting factor. The direct cash hog trade was quiet, but softer at midday, losing 0.88 to 77.76 and a 5-day rolling average of 76.99. In the retail trade, pork carcasses had a strong week last week, closing nearly 7.00 higher than the previous week. At midday, pork carcasses added 0.27 to 87.99.  The load count was light at 158 loads. The hog market will be closely watching the winter storm forecast across the northern Plains this week. The heavy snow and ice totals could limit hog movement and provide some strength to cash hog prices. The strong price move today confirms the hog market has turned the corn and is working higher, fueled by the trend higher in cash prices. This combination could open the door for additional gains in the next few weeks as prices work to a possible springtime high.

DAIRY HIGHLIGHTS: This morning’s Global Dairy Trade Auction saw GDT cheddar close 1.50% higher to the equivalent of $2.31/lb, which seemed to bring on some buying in the spot trade later in the morning in which the block/barrel average jumped 5.75 cents to $1.77125/lb. It is encouraging to see the GDT price holding a decent premium to the US spot price and Class III futures reacted with double digit gains in the nearby months as we begin the last full week of February. Tomorrow, the USDA will release January Milk Production numbers followed by Cold Storage on Friday to make for a busy, shortened week.

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.


Amanda Brill

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