CORN
Corn futures are firm this morning with March up 1-1/2 cents to 6.36-1/2 wile maintaining an up-trend since mid-September. The outlook for South America is turning mixed, allowing for the technically overbought stages of the corn market to lead to choppy action. Looking forward, new longs may be adding positions due to positive chart formation. On the weekly chart, nearby corn futures have little resistance above contract highs. Most are waiting for the next 30 days of Brazil’s weather and its impact on 2nd crop. For now, watch for two-sided trade today as Weekly Ethanol Stats come out ahead of Weekly Export Sales tomorrow morning. South America’s short corn crop could be down 825 mil bu could increase demand for U.S. corn exports. Today’s ethanol production is seen lower than last week at 1.026 mil barrels per day. Stockpile average estimate is 24.708 mil bbl vs 24.476 mil a week ago. This would be the highest since May 2020.
SOYBEANS
Soybean futures were up overnight in the nearby March contract to 15.37-1/4 on gains of 8-3/4 cents as the market factors in large cuts to South American production. Nov beans are making new highs this week on talk of the U.S. 2022/23 US balance sheet may be tighter now than 2021/22. The July-Nov spread hit a new high near +146. AgRural, one the many firms releasing South American production updates, pegged Brazil’s crop at 128.5 million metric tons, roughly 11 mmt below the USDA’s latest estimate. While the drop is notable, at some point this decline will be fully priced in and futures will likely be viewed as over-extended to the upside. In the meantime, March meal broke up-trendline resistance opening up a potential move near the Jan and May 2021 highs. For now, the trade is anticipating more export demand as daily announcements supported this idea ahead of tomorrow’s USDA Weekly Export Sales data. USDA released the monthly oilseed report on their website. Crushing was 2.6% higher than same period last year; Crude oil production 4.1% higher than same period last year. Crude and once-refined oil stocks were up 16.8% year over year.
WHEAT
Wheat futures were mixed overnight. March CBOT futures are unchanged at 7.69. March KC wheat is up 1-1/2 cents to 7.87-1/4. The nearby KC contract remains in a broad range between 7.50 and 8.50 until more is known about Ukraine and U.S. 2022 weather. March MPLS wheat is up 3-1/4 cents to 9.18-1/4. Winter wheat markets continue to swing up and down within their respective trading ranges with a weaker bias since the run up 3 months ago. Warmer forecasts for U.S. winter wheat areas, including an uptick in moisture for the central Plains is keeping price rallies limited. The strong dollar is also noted. Underpinning price is the uncertainty surround Russia and Ukraine where, until the risk of invasion fully subsides, wheat prices are coiled for a jump higher.
CATTLE
Cattle futures are called steady to higher on follow-through from a supportive cattle inventory report and technical buying across the livestock complex. The Cattle inventory report confirms the market expectation of a tighter cattle supply. This keeps the expectation of a still tightening cattle supply going forward. Multiple contracts of live and feeder cattle pushed to, or are challenging new contract highs. Retail values were weaker. Boxed beef values were lower at midday (Choice: -4.96, and Select: -3.05). the load count was light at 127 loads. Retail values are still trending well above historical averages, reflecting the good demand tone. Weekly cash trade was quiet, but asking prices are trending higher. The feeder market was higher fueled by buying strength in the cattle markets. The market is focusing on the tighter calf crop helping to boost competition for cattle. The cattle market overall looks friendly and is still trading in an up-trend. We like the near-term view of the market, as prices may be starting to target a winter/early spring high.
HOGS
Hog futures are called mixed to higher. The cash market and retail values stay supportive helping push money into the hog market. April futures broke out of its consolidation pattern to the upside as prices surged to new contract highs. This was seen throughout the complex as summer months pushed to new contract highs as well on Tuesday. The anticipation of a tighter hog supplies fuel the deferred markets. The direct cash market was supportive, adding .31 to 67.00 for the weight average price. The lean hog index had good strength, reflecting a more active cash market. On Tuesday, the index gained 1.54 to 82.15. Pork retail values were softer, with midday values losing .79 to 93.72, with a load count of 168 midday loads. Afternoon reports were not published due to packer submission issues. The weakness kept the pressure on the Feb contract. The buyers will be watching the fundamentals for reason to maintain strength.
Author
Matthew Strelow