Market Snapshot | January 26, 2022

Corn futures are narrowly mixed at midmorning.

• Corn futures fell under corrective pressure following yesterday’s climb to seven-month highs, with spillover from slumping wheat adding pressure.
• Rainfall expected into early February should improve crop conditions in South America, but extended dryness has already caused irreparable damage to yields in some areas. Paraguay and far southern Brazil will receive “significant rain and relief from dryness” into Friday, World Weather said today.
• With another round of rain expected Feb. 3-5, “crops that have not been too badly harmed by hot and dry weather should see an increase in yield potentials,” the forecaster said. “A full recovery of yields is not possible, but crops will be left in much better conditions in two weeks than they are today.”
• U.S. ethanol production averaged 1.035 million barrels per day (bpd) the week ended Jan. 21, down 18,000 bpd from the previous week but up 10.9% from the same week last year.
• Ethanol stocks rose 884,000 barrels to 24.476 million barrels, the highest since May 2021, and Midwest supplies hit a record 10.107 million barrels, 28% above year-ago.
• South Korea purchased around 262,000 MT of optional origin corn in two separate tenders.
• March corn fell as low as $6.15 today after reaching a seven-month intraday high at $6.31 yesterday. The market may be reaching a technical exhaustion point and could consolidate or push even lower in coming days. Initial support is seen at the 10- and 20-day moving averages around $6.08 and $6.04 1/4, respectively.

Soy complex futures are broadly higher, led by gains of over 80 points in soyoil and 15 to 16 cents in soybeans; soymeal is up around $4 in the nearby March contract.

• March soybeans climbed near this week’s highs as a surge in crude oil boosted soyoil futures. Smaller crop prospects in South America continued to underpin soybean prices.
• The combined 2021-22 soybean harvest in Brazil, Argentina, Paraguay and Uruguay is expected at 186.3 MMT, down 7.4 MMT from the last season and a four-year low, according to an Oil World forecast. Brazil’s soybean crop will fall to about 135 MT from 138.5 MT last year and Argentina’s crop at around 42 MMT, down 1.8 MMT, Oil World projected.
• A large part of central and northern Argentina will receive additional rain today, inducing further improvements in crop and soil conditions, World Weather said.
• March soybeans rose as high as $14.22 3/4 after dropping as low as $13.93 3/4 during overnight trade. Resistance is seen at last week’s high of $14.29 1/2.

Wheat futures are sharply lower, led by declines of over 25 cents in nearby SRW contracts and nearly 30 cents in spring wheat.

• Wheat futures fell under profit-taking pressure after rallying to four-week highs yesterday.
• An “impressive snow event” in the west-central Plains yesterday brought accumulations of 10 to 27 inches in a relatively narrow band extending from east-central Colorado into west-central Kansas, World Weather Inc. reported.
• The snow, when melted, “will lead to a small region of improved topsoil moisture for a portion of hard red winter wheat country,” World Weather said, though area impacted by the greatest precipitation “was extremely small” relative to the entire HRW production belt.
• March SRW wheat fell as low as $7.87 after jumping 38 cents the past two days. March HRW wheat fell as low as $8.07 1/2 after rising 16 1/2 cents yesterday to $8.34 1/2, the highest close since Dec. 28.

Cattle futures are higher at midmorning, led by nearby live cattle contracts.

• Live cattle futures posted a corrective bounce following sharp declines early this week, with a rebound in crude oil and U.S. stocks adding support.
• Initial cash cattle activity occurred around $137 in the Southern Plains yesterday, roughly steady with last week’s trade. Sales volume was light, with most feedlots seeking higher prices and packers likely reluctant to raise bids.
• Wholesale beef market strength also provide support for futures. Choice cutout values fell $1.12 yesterday to $292.38, though the average remains near a four-month high and movement was strong at 143 loads.
• Live cattle futures have filled Monday’s chart gaps on the strong recovery.

Lean hog futures are lower after the recent string of contract highs.

• Hog futures fell for the first time in seven sessions as signs the market is overbought triggered a corrective pullback. Firming cash fundamentals continue to underpin the market.
• Today’s CME lean hog index fell 24 cents to $78.08, still near the highest levels since mid-November. However, front-month futures high premium to the index is dampening buying interest.
• Pork cutout values fell $3.20 yesterday to $92.46, down from a 2 1/2-month high the previous day. Movement totaled 347 loads.
• April lean hogs reached a contract high earlier at $97.50 before fading to drop as low as $95.55, below yesterday’s low.