The CME and Total Farm Marketing offices will be closed Monday, February 21, 2022 in observance of Presidents Day
Corn futures were unchanged overnight ahead of this morning’s USDA Weekly Export Sales. May corn is fractionally lower at 6.46-1/4. Dec is down 2-1/2 cents to 5.91-1/4. U.S. and NATO report Russia may be increasing troops. There were reports of mortar fire by Ukraine forces in disputed Donbas state, so traders remain on edge over the situation there as Ukraine needs to export 670 mil bu of corn. Corn crop losses in South America could be as high as 900 to 990 mil bu. Trade estimates for this morning’s USDA Weekly Export Sales are are 500,000 to 1.0 mil ton for 2021-22 marketing year corn, zero to 250,000 tons for 2022-23. Crude is down $2.00/bbl this morning while consolidating near new highs, and the dollar is firm. Corn technicals, overall remain supportive for the market, but stochastics are trending lower which would reinforce a lower move, particularly if support from the bean market flips lower.
The soy complex was mixed overnight with May beans up 8 cents to 15.95-1/2 and Nov up 4 to 14.59-1/2. Beans, across the board, are adhering to their sharply rising 10-day moving averages. May meal is up 4.50 per ton to 451.80. Trade estimates for export sales are 750,000 to 1.80 mil ton for 2021-22 marketing year beans, 800,000 to 1.50 mil tons for 2022-23. Soymeal sales are seen coming in between 150,000 and 500,000 tons for 2021-22, zero to 50,000 tons for 2022-23. Some continued weather concerns in South America remain an underpinning factor for the complex moving forward. Some Chinese soybean processors are walking away from contracts to buy shipments from Brazil because a sudden jump in export prices from the Asian country’s biggest supplier has made crushing unprofitable. About 10 cargoes from the South American nation have been canceled since last week in a move known as a washout, according to people familiar with the matter. In a washout, no physical delivery is performed on a contract with the agreement of both buyer and seller. With Paraguay’s soybean crop expected to be less than half of that of a normal year, Argentina may be selling soybeans to Paraguay crushers this year.
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Wheat futures were firm last night. May Chicago wheat was up a nickel to 7.91-1/4. May KC wheat was up 7 cents to 8.19; And, May MPLS was up 5-1/2 to 9.55-3/4. Trade estimates for this morning’s USDA Weekly Export Sales are 500,000 to 1.0 mil tons for 2021-22 marketing year wheat, zero to 250,000 tons for 2022-23. Look for choppy action as the trade digests all the recent Russia/Ukraine news, weather plays out in the U.S. South Plains, and row crops do their thing. Spot basis bids for hard red winter (HRW) wheat were steady to weaker southern U.S. Plains on Wednesday, but protein premiums in the Kansas City rail market were mostly firmer, dealers said.
Cattle futures are called steady to higher while rebounding this week after some selling pressure late last week. Cash trade is light through midweek, but a small amount in Nebraska transacted for $142 which is $1-2 higher from last week. Unconfirmed by the USDA, $142 also traded in Kansas and Texas on Wednesday. Futures prices are short-term overbought and normal basis levels would indicate April futures are $4-5 overvalued from the current cash market. Prices are also into a heavy area of resistance dating back to 2014-2015. However, if breached cattle has a shot at retesting the all-time highs in those years. Seasonal patterns are still bullish for a few more weeks.
Hog futures are called mixed after a strong rebound this week. Look for a retest of previous highs, though the April contract’s failure to close above the previous high of 107.70 could signal a top. A close below Monday’s low of 101.00 would potentially confirm a top. The market appears to be pricing in tighter supplies, though April stays at a hefty premium to cash. Any pullback in price could be violent based on the oversold condition of the futures market. Managed money funds have been aggressively buying hogs the past 3 week, and as of last week Tuesday were net long 78,672 contracts, the longest they’ve been since August 2021 when their position peaked at 89,131. Their record net long happened on Sept 24, 2013 at 97,952. Anything over 60,000 is big, leaving the market vulnerable to long liquidation.