CORN
Corn futures were down overnight with March losing 7 cents to 6.14-1/2 and Dec down 5-1/2 cents to 5.67-1/2. Crude oil is down 1.50 and the dollar is up 28 points after correcting sharply lower, so far this week. Yesterday, U.S. ethanol stocks rose 5.6%, higher than trade estimates and a disappointment to a bullish marketplace. Trade estimates for this morning’s USDA Weekly corn export sales are 600,000 to 1.40 mil tons versus 1.402 mil last week. After the close yesterday, USDA’s China Ag attaché raised China corn production and lowered total corn imports to 20 mmt versus 26 previously. Most still look for U.S. corn demand to increase 500 mil bu and drop final U.S. 2021/22 carryout to 1.100 bil bu. That should be friendly old/new crop corn spreads and futures. There is talk that Brazil’s corn stocks, including 1st crop could be 25 mil metric tons versus USDA estimate of 34 mmt. This suggests Brazil could be low on supplies before the second crop harvest. Spot basis bids for corn shipped by barge to the U.S. Gulf steadied on Wednesday with the market underpinned by strong demand on the export market.
SOYBEANS
Soybean futures traded lower overnight after surging higher Wednesday on one 3,000 contract buy order. The trader sheet for Feb. 2 had funds: net sellers of 9,000 soybeans, sellers of 1,000 soymeal, and buyers of 1,000 soyoil. This morning, March beans are down 13 cents to 15.32-1/4. Nov dropped 9 cents to 13.80-3/4. March meal shed $2.0 per ton to 433.10; and Soyoil is down .68 to 65.30. Malaysian palm oil prices overnight were down 79 ringgit (-1.41%) at 5513. Trade estimates for this morning’s USDA Weekly soybean export sales are 600,000 to as high as 1.80 mil tons versus 1.025 mil last week. China remains on holiday, but new U.S. soybean sales suggest they may be worried about South America crop losses and the fact they have not bought enough imports for 2022 or first half of 2023. Shrinking South American final soybean crop estimates suggest increased demand for U.S. beans. One analyst lowered his estimate of US 2021/22 soybean carryout to 120 mil bu. Agricultural consultancy Datagro group cut its forecast for soybean production in 2021-2022 to 130 mil metric tons, from its December forecast of 142.1.
WHEAT
Wheat futures were down overnight and may be following the drop in corn prices. March CBOT futures fell 8 cents to 7.47. March KC wheat is down 8 cents to 7.61-1/2. March MPLS is down 6 cents to 9.02. Trade estimates for this morning’s USDA Weekly wheat export sales are 200,000 to 675,000 tons versus 676,000 last week. The ‘bear camp’ can argue U.S. export prices holding a premium to EU and Black Sea supplies and recent moisture across parts of the drier U.S. HRW south Plains as pressuring factors. Technically, March KC traders triggered sell stops at the 7.76 price level. Bulls suggest a lack of weather pattern change while focusing on February south Plains conditions to be drier and warmer than normal, as well as drier weather in parts of the south west EU, NW Africa and parts of NW Russia.
CATTLE
Cattle futures are called steady to higher as the market maintains buying strength, Most contracts posted triple-digit gains fueled by a weaker corn market and a push higher in cash bids. We view the near-term as targeting a winter/early spring highs, but cattle futures are moving into over-bought territory as the majority of contracts break out to new contract highs. April cattle have moved up and past the $145 price level and may be looking to target $150. With strong packer margins, weekly cash trade is starting to build higher than last week. Northern trade at $140 live bids and $222 for dressed beef is trending $3-4 above last week. Southern trade is slower to develop as producers are looking for stronger bids. Trade was still light mid-week. Boxed beef values were lower at the close (Choice: -2.29, and Select: -0.65). The load count was light at 130 loads. At $283 for Choice carcasses, retail values are still trending well above historical averages, reflecting the good demand tone. The feeder market is sharply higher fueled by buying strength in the cattle markets and a sharp pullback in wheat and corn markets. With new contract highs and the perception that cattle numbers are tight, the competition for feeders is helping push prices higher.
HOGS
Hog futures are called mixed to higher. Futures saw mixed price action yesterday, but deferred contracts made new highs. The cash market and retail values stay supportive helping usher money into the market. April hogs touched the $100.00 barrier on Wednesday, and could provide some psychological resistance over the market. The Cash Hog Index is trending higher, gaining .99 to 83.14 while still trading at a 4.21 discount to the Feb futures, and with expiration just around the corner, keeping the rally limited. Direct morning cash hogs surged higher adding 19.35 to an average of 86.35, helping support the deferred hog futures. Retail values were firmer supported by good demand. At closing, pork retail values were 3.47 higher to 96.44 on a load count of 294 loads. In summary, the hog market has been moving aggressively higher, and is moving into over-bought territory, but still looking for a sign of a top.
Author
Matthew Strelow