CORN
Corn futures were weaker again overnight pressured by another pullback in crude ($6.50 per barrel) amid rumors of ceasefire in Ukraine. May corn is down 7-1/2 cents to 7.40-3/4, and Dec is down 6 to 6.46-1/2. The U.S. is signaling any Chinese involvement could increase U.S. sanctions. Ukraine’s President plans to address U.S. Congress virtually tonight. Meanwhile, in China, covid lockdowns are increasing, thus raising demand concerns. A lowering of energy futures and new concern about adequate U.S. supply is now bearish for the corn market. On Monday, Managed funds were net sellers of 12,000 corn, and are now estimated to be long 359,000 contracts. This week, the U.S. Fed is believed to be ready to increase U.S. rates. Some feel rates need to be 2.5% to fight inflation.
SOYBEANS
The soy complex was down overnight. May bean lost 21 cents to 16.49-1/2. Nov was down 15 to 14.66 as the contract builds a base of support, underpinned by the availability of supply on the global market between South America and North America’s production cycles. May meal was down 6.60 to 477.70, and the nearby soy oil contract lost 1.23 to 72.72. Malaysian palm oil futures are down are down 10%. Dalian soybean, soymeal was higher, soy oil lower. On Monday, Managed funds were net sellers of 2,000 soybeans and 7,000 soy oil and bought 4,000 soymeal. They are now estimated to be long 166,000 soybeans, 101,000 soymeal and 79,000 soyoil. Brazil’s soybean harvest is 65% complete with central Brazil seeing some rains while West, East and South are dry, as well as Paraguay and Argentina. We’ll get the February NOPA crush report later this morning.
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WHEAT
Wheat futures are back up this morning with strong gains posted across the complex. Nearby May Chicago wheat is up 32 cents this morning to 11.28-1/4. May KC is up 25-1/2 to 11.25-1/2. May MPLS is up 24-1/2 cents to 10.95. U.S. farmers planted 34.4 million acres of winter wheat for 2022, the most in six years. The U.S. south Plains forecast is dry. Kansas’s wheat crop ratings dropped to 23% Good-to-excellent from 24% last week. USDA reported that topsoil moisture was short or very short in 72% of the number 1 producing state, an improvement from 81% the previous week. For Texas, the No. 2 winter wheat state by planted area, the USDA rated just 6% of the crop as good to excellent, down from 7% the previous week. The USDA rated 75% of the Texas crop as poor to very poor, steady with the previous week. Oklahoma’s improved from 15% G/E to 24%. Technically, prices are consolidating after a major shift from last week’s topping action.
CATTLE
Cattle futures are called steady to higher. Strong money flow has moved back into the cattle markets as prices broke through resistance levels , improving the technical picture and bringing value buying into the markets. Encouraged by the positive weekly close on the cattle market last week, and softer price tone in grain markets, April futures pushed through resistance at the 10-day moving average, triggering a round of short covering. The close at the top of the range will likely leave additional buying support for Tuesday with the next resistance at the $142 area over the April contract. Last week’s cash trade at $138 was disappointing. Lower or steady cash bids could be limiting to the April futures, now trading a premium to cash. Warmer weather may start boosting spring demand for beef retail values. The retail market was higher on Monday, (Choice: +.80 to 255.51, Select: +.83 to 249.94) with demand light at 83 loads. Like live cattle, feeder prices broke out to the top side technically, and prices saw short covering grain markets softened to start the week. The Feeder Cattle Cash Index was 0.25 lower to 152.31., limited the gains in the front month contracts.
HOGS
Hogs are called mixed for this morning as the summer contracts see buying strength, but front months struggle with a premium to the cash market. The April hog contract stays range bound between the 10-day and 40-day moving averages. The next move could be based on the cash market. The National Direct morning direct trade was 1.72 higher to 100.65 compared to Friday. The Lean Hog Cash Index was 0.85 higher to 100.76, posting its highest close since August and back above the 100 point level. Pork cutout values were stronger at midday, trading 5.84 higher supporting the futures market, but slid into the close, holding a .64 gain on the day to 103.19. The load count was moderate and improved at 347 loads. Total hog production maintains its trend below last year, with estimated pork production down 7.5% for the year over year, supporting prices. The tighter supply picture, and strength in retails values have helped support the cash markets. The price action that started last Friday may be the start of another run higher for the summer months, fueled by those fundamental factors.
Author
Matthew Strelow