CORN
Corn futures traded two-sided overnight, consolidating from successive new highs the past 6 sessions. Nearby May corn traded a range from 7.99-1/2 to 8.09 last night and is down 2 to 8.02 this morning. July corn is off 4 cents to 7.95-3/4 after posting a new contract high at 8.14 yesterday. Dec corn is down 7.40. Overbought technicals are likely weighing on sentiment mid-week, but outside markets offer support with the dollar backtracking 60 basis points and crude up .75 while testing key support. Looking ahead, the U.S. Fed is poised to raise interest rates to fight inflation. The International Monetary Fund (IMF) lowered China’s 2022 economic growth to 4.4% vs China goal of 5.5; 2021 growth was 8.1. IMF lowered U.S. 2022 economic growth to 3.7% vs 4.0 in Jan. IMF estimated U.S. 2023 growth at 2.3%. US 2021 growth was 5.7%. Weekly Ethanol Stats will be out later this morning. On Tuesday, Managed funds were net sellers of 9,000 corn and are still net long an estimated 378,000 contracts.
SOYBEANS
The soybean complex was mixed overnight with May beans up a nickel to 17.21-1/2, July fractionally higher to 16.92-1/2 and Nov down 2-1/2 to 15.18. July meal is up 1.90 to 461.50. July soy oil is down .26 to 77.94. Concerns about lower China economic factors and a possible drop in commodity imports offers resistance to the complex this week. However, higher World vegoil prices are supportive. On Tuesday, Managed funds bought 2,000 soybeans and 2,000 soy oil and are now estimated to be 183,000 soybeans, 99,000 soymeal and 91,000 soy oil.
Like what you’re reading?
Sign up for our other free daily TFM Market Updates and stay in the know!
WHEAT
Wheat futures are trading in the red this morning after choppy trade overnight. July Chicago wheat is down a dime to 10.95. July KC wheat is off 2 cents to 11.74-1/4. July MPLS wheat is down 3 to 11.69-1/4. On Tuesday, Managed funds were net sellers of 11,000 Chicago wheat, but still long an estimated 12,000 contracts. The war in Ukraine continues to escalate with Russia attempting to overtake the Donbas region. The U.S. two-week forecast is for more cold weather which could slow spring plantings even more. Look for more uneven trade in wheat as participants weigh their level of risk exposure in these uncharted waters.
CATTLE
The cattle market is called mixed. The most actively traded June contract worked higher on Tuesday, but prices consolidated within Monday’s trading range. The technical picture is still concerning given the reversals established on the chart on Monday. With Cattle on Feed reports to be released at the end of the week, June cattle are likely range bound with 137.500 as top resistance and 135-400 supporting the bottom. The market is expecting to see feeder placements decline year-over-year, which could support Feeder prices. Overall expectations for the report are: Total cattle on Feed at 100.4%, Placements at 92.2%, and Marketing at 98.2% of last year. Cash trade may still be the key for price movement this week. Trade saw some very light action on Tuesday, with southern deals at $140, up $1 over last week. Asking prices are still targeting $142, which is firmer than last week. Cash trade is still likely a be developing with a stronger tone today. Beef cutouts were softer at the close (Choice 269.93 -1.15; Select 259.21 -.25), with light box movement of 102 loads. The market is anticipating a firmer Choice beef tone as cattle weight are working seasonally lower, and packers will be searching for Choice beef to fill orders. The feeder market saw some price recovery with the softer grain market, but, like Live cattle, consolidated within Monday’s range. Apr feeders are likely tied to the index, which lost .11 to 154.51 but is running at a discount to front-month futures and could be a limiting factor.
HOGS
The hog market is called to open mixed to lower after bear spreading returned amid the premium of futures to the cash market guiding front month contracts to triple digit losses. The weak technical signal could leave the market open to additional selling pressure this morning, but if the cash market were to find some stability, prices may look to challenge the most recent high. The cash market has been a concern, but midday values saw some strength on Tuesday. National Direct midday values were 5.64 higher compared to Monday, and the weighted average price was 99.69 and the 5-day average firmed to 97.26. The Lean Hog Index was firmer for the second consecutive day, gaining .35 to 100.33. The deferred futures premium over the index is concerning and could be a limiting factor, as May is holding a 14.370 premium to the index. Pork carcasses were 2.07 higher, rebounding after Monday’s disappointing close, but failed to hold those values, finishing 2.37 lower to 107.12 on a load count of 296 loads. We view the hog market might be trying to find some equilibrium and balance in price values. Supported by strong demand, front-end hog prices are lofty compared to the current cash. Deferred futures may not be reflecting the true picture of the hog market supply and may be undervalued.
Author
Matthew Strelow