TFM Midday Update 02-01-2023

CORN

Mar corn down 3 @ 6.77
Today the Fed is expected to issue an interest rate increase of 0.25% which could affect the markets
Argentina announced a 27 million dollar bailout for drought-stricken farmers – combined losses for corn, soybeans, and wheat could be up to 20 mmt
Brazil corn may work its way into Europe as it is now cheaper than Black Sea feed wheat
The Cattle Inventory report showed Jan 1 cattle down 3%, which could mean less feed demand for corn

Mar soybeans down 15 @ 15.23
The Ag attaché in Argentina lowered their soybean crop to 36 mmt (which is down 9.5 mmt from the official USDA estimate)
US Energy Department reported that renewable diesel plant capacity increased by 141% over the previous 12 months
US soybean export inspections are running higher than the USDA’s estimated pace
China may try to hold out on making US purchases in favor of the coming Brazil crop

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Mar Chi wheat down 6 @ 7.55, Mar KC up 3 @ 8.82, & Mar MNPLS up 4 @ 9.26
SRW wheat crop conditions are good, and the expectation for a drier trend in April could help that harvest
US wheat is still more expensive than Russia and Germany
After a firmer close yesterday, wheat is mixed this morning
Winterkill is still a threat to the HRW crop
US wheat sale commitments are 7% below last year
Egypt’s GASC is tendering for Feb-Mar wheat with Russia expected to be the origin

Feb LC down 0.200 @ 158.650 & Mar FC down 2.375 @ 183.775
The Cattle Inventory report results were generally as expected
Beef cow herd down 4% from last year & calf crop down 2%
Both live and feeder cattle futures are weaker this morning, an indication that much of the report was already factored into the market
Choice cuts down 2.01 and select up 1.40
Cattle slaughter projected at 128K
CME Feeder Cattle Index for 1/31: up 0.54 @ 180.42

Apr hogs down 1.900 @ 84.525 & Apr pork cutout down 1.500 @ 93.075
Feb hogs may continue to converge with the index as that contract nears expiration
Choppy trade in April contracts forward may indicate support is building
There has not yet been anything to trigger the funds to begin short covering
Higher cash expected today as packers need to maintain slaughter pace
National Direct Afternoon report gained 0.77
Hog slaughter projected at 490K
CME Lean Hog Index for 2/1: down 0.13 @ 72.58

Brandon Doherty