CORN
Corn futures overnight made new highs to start the week. March corn rose 6-1/2 cents to set a new top at 6.42-1/2. Dec hit 5.77 on gains of 7-1/2 cents. Outside markets show the dollar easing 15 basis points after closing at its highest level in a year and a half on Thursday, and crude up .83/bbl. South American corn crop losses could reach 20 mmt, and U.S. 2021/22 carryout could slip to 1.20 bil bu due to higher ethanol and export demand. The key time for Argentina corn is Feb-March. The trade is also concerned that the conflict over Ukraine’s independence could slow the 700 mil bu of corn exports they are expected to ship over the remainder of their market year. Ship owners are adding a war clause to contracts in case sold cargoes cannot be loaded. Weekly Export Inspections will be out later this morning.
SOYBEANS
Soybean futures rallied overnight to 20+ cent gains across the board to the July contract. March beans peaked at a new high of 14.96-3/4, up 26-3/4 cents before trimming gains. Nov beans got to 13.69-1/4 after trading 17-3/4 cents higher amid ideas that the U.S. 2022/23 balance sheet may be tighter than 2021/22. Growing open interest in the $15.00 CALL options may lead to traders eventually rolling to a higher strike price. Brazilian producers have harvested 11.3% of the 2021/22 soybean crop as of Jan. 28, consulting firm Safras & Mercados said in an emailed report. Harvest pace is advanced compared with same period a year ago, when only 1.4% of the 2020/21 crop was reaped. March soybean meal is up 5.20/ton this morning to 416.40; And, soyoil is up .89 to a new high. Talk of lower South America supplies and higher biodiesel demand with soyoil at a discount to palmoil is noted. Malaysian palm oil prices overnight were down 36 ringgit (-0.64%) at 5592. China’s markets are closed until Feb 7th. However, USDA recently confirmed private sales of 264,000 ton of new-crop U.S. soybeans to China, as well as 251,500 tons of old-crop soybeans to unknown destinations and another 141,514 tons to Mexico.
WHEAT
Wheat futures followed row crops higher overnight. Double-digit gains were achieved before trimming gains. March Chicago wheat hit an overnight high of 7.98-1/2 on gains of 12-1/4 cents. The nearby KC contract got to 8.17 on gains of 14.3/4 cents. March MPLS wheat was up as much as 15-1/2 cents to 9.34-3/4. Prices are in limbo as weather and Ukraine’s struggles with Russia anchors prices in the middle of their respective trading ranges. Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), bought 420,000 tons of wheat in an international tender. The purchase included 60,000 tons of Ukrainian, 60,000 tons of Russian and 60,000 tons of Romanian-origin wheat for shipment March 5-15, and 120,000 tons of Ukrainian, 60,000 tons of Romanian and 60,000 tons of Russian-origin wheat for shipment March 16-26. in the U.S., dryness and drought in the southwestern Plains continues to threaten dormant winter wheat. Moderate to heavy precipitation is only expected to stall the drought’s progress.
CATTLE
Cattle futures are called steady to higher on the heels of generally good money flow into commodity. Strong retail values, and improved demand for cash cattle are bringing some optimism into the market. April cattle look poised to re-challenge the contract highs with the firm close on Friday, but still need more support to break those highs from a couple weeks back. There was moderate to active trade in the North at $136 to $138 live and $218 dressed. That is mostly steady with last week. Light to moderate trade also developed in the South at $137 live, which was fully steady compared to the prior week. The Choice cutout moved $3.87 lower last week, while Select decreased by $3.08/cwt. Larger production has started to allow buyers to resist the higher prices and provide some pushback to the market, but overall prices are still historically high. The strength in the live cattle market helped lift feeders. Feeder charts look challenged, and next week could bring a technical break if support levels don’t hold. 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 after seeing big swings to end the week. A strong cash market and historically strong retail prices are supportive. April futures saw nearly a $3.50 trading range on Friday while looking tired, technically. The lean hog index had good strength last week, reflecting a more active cash. On Friday the index gained .55 to 79.75, and was 2.96 higher on the week. Pork retail values were softer on Friday, losing 1.80 to 96.39, but trended slightly higher throughout the week. Deferred contracts have shown strength on optimism fueled by the potential tighter supplies of available hogs. Hog futures look to be taking a pause, but prices rejected the lows for the week relatively quickly, signaling the market may still want to work higher.
Author
Matthew Strelow