CORN
Corn futures stayed volatile overnight with a strong push to the upside testing the .35 cent daily trading limit. May corn peaked at 6.88-1/2 on gains of 32-3/4. Dec was up as much as 26-1/2 cents to an overnight high of 6.04-1/4 before trimming gains to 5.95-1/2. Outside markets were active, too, with the dollar up 26 points, crude up 4.00 per barrel and stock index futures down 400 points. On Friday, Managed funds were net sellers of 45,000 corn, and are now estimate long 371,000 corn. Ukraine and Russia peace talks are underway today as Russia troops advance onto Ukraine’s capital. The U.S. State of Union address is scheduled for tomorrow. Some Ukraine corn exports are seen switching to U.S. Without a peace agreement, Ukraine grain exports could be delayed for months. Asian markets are seen well supplied for the April-May period, but from July and August onward, the coverage may be very low. We will get Weekly Export Inspections this morning.
SOYBEANS
The soy complex is up sharply this morning. May beans got to 16.46-1/4 on gains of 61-3/4 cents on the heels of last week’s 1.80 trading range including a new high etched at 17.59. For now, resistance is near 16.70 with a range that could be 15.50 to 18.00 until more is known about U.S. 2022 supply. Many estimates have U.S. carryout around 130 mil bu vs USDA’s 305. Nov beans rose to 14.56-1/2 on gains of 41-1/2 cents last night. May meal peaked at 452.60, up 9.90. May soybean oil was up 3.21 to 72.14. Dalian soybean, soymeal, palmoil and soyoil futures were lower. Malaysian palm oil prices overnight were up 333 ringgit (+5.58%) at 6299. On Friday, Managed funds were net sellers 30,000 soybeans, 8,000 soymeal. and 10,000 soyoil. The funds are now estimated to be net long 164,000 soybeans, 86,000 soymeal and 77,000 soyoil. In Brazil, Rio Grande do Sul and Parana is forecast for scattered showers through Tuesday. Temperatures above normal through Monday, near normal Tuesday. Mato Grosso, MGDS and southern Goias Forecast: Isolated showers through Tuesday with temps near to above normal through Tuesday.
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WHEAT
Winter wheat futures are in expanded limits again today. May Chicago wheat rallied to 9.34-3/4 last night and is up 47 cents to 9.06-3/4 this morning. May KC wheat is up 43-1/2 cents to 9.34-1/2 versus last night’s high posted at 9.66 versus and compared to last week’s new high of 9.81. The nearby contracts may range as high as 10.00 until more is known about U.S. 2022 supply. May MPLS wheat has been pulled up 30 to 40 cents to 9.92 in the May contract. USDA estimated U.S. 2022/23 wheat carryout at 731 and in line with most estimates. On Friday, Managed funds were net sellers of 25,000 Chicago wheat and are now estimate to be short 12,000 wheat. The fact the U.S. did not impose sanctions on Russia’s food and energy companies was disappointing to the funds at the end of last week. In addition, more long liquidation and profit taking was sparked by word that China asked Russia to have peace talks with Ukraine. Just before the unprecedented rise in tensions between Russia and Ukraine, China signed a deal with Russia lifting import restrictions on Wheat and Barley, media reports said. For now, however, the grain and oilseed markets are back in rally mode on the last day of the month. In the U.S, weather in the Plains looks to remain warm and dry.
CATTLE
Cattle futures are called mixed. The USDA cattle on Feed report was released on Friday afternoon with total cattle on Feed as of Feb 1 at 101% of last year at 12.10 million head, and at the higher side of analyst expectations. Cattle placed in January was at 99% of last year or 2.024 million head, in line with expectations, and marketings in Jan at 97% of expectation, inline with expectations. The slightly heavier cattle totals in the feed lots was likely priced in, but could keep some selling pressure in the market to start the week. April cattle followed through on the head and shoulders pattern, and are testing the bottom of the trading range and the 100-day moving average, which held on Friday. Last week, there was active fed cattle cash trade in the North at mainly $142 to $145 live, and $226 to $229 dressed. That was mostly steady to $2 firmer compared to the previous week. The Choice cutout moved $10.35 lower this week, while Select decreased by $10.30 /cwt. Cold, wintery weather has slowed demand, but lower prices has increased buyer interest, creating a more manageable supply. The light placement numbers on the report should help keep buyers active looking for feeders. The market was choppy last week, but did pull off the lows of the week, which could be supportive next week. Cattle markets overall are still in an uptrend, the market has experienced a pull back. Fundamentals will be key next week to help determine price direction lower or some price recovery.
HOGS
Hog futures are called steady to lower. The first level of support under the April contract is the 10-day moving average at $106.000, which the market pushed through Friday, now looking to test the 20-Day moving average near $103. Hog futures saw more selling pressure to end the week as the market closed with triple digit losses. Technical selling and the premium of the April futures to the cash market added to the selling pressure. Technically, the hog market is making a change of direction. The depth of the correction will be key. The fundamentals stay supportive, on a tighter hog supply overall. The market is still in a strong uptrend. The end of month trade will likely bring some correction. With the losses on the week, weekly charts posted bearish reversal as well, which could lead to a trend lower in hogs. The hog market was over-bought, and due for a correction. Pork cutout values are still trending higher, and had a strong close $3.00+ higher to 113.32. The load count was moderate on Friday at 256 loads. Cash was supportive with the National Direct morning trade was marking a base price of 86.49, down 1.09 from yesterday and the Cash Lean Hog index was .12 lower to 98.04. The index was 3.80 on the week. The April futures is still holding a 5.635 premium to the index, setting up some profit taking as the market nears the end of the month.
Author
Matthew Strelow