Ahead of the Open | January 28, 2022

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GRAIN CALLS

Corn: 1 to 4 cents higher.

Soybeans: 9 to 16 cents higher.

Wheat: 3 to 7 cents higher.

GENERAL COMMENTS: Soybean futures overnight hit contract highs for the second straight session and corn also rose. Wheat futures firmed late in the overnight session. Malaysian palm oil futures hit a record high and posted a sixth weekly gain after Indonesia limited exports, while crude oil reached a seven-year high. U.S. stock index futures are firmly higher this morning.

USDA reported a flurry of daily soybean sales. Exporters sold 141,514 MT of soybeans for delivery to Mexico and 251,500 MT to “unknown destinations,” both during the 2021-22 marketing year. USDA also reported exporters sold 264,000 MT of soybeans for delivery to China during the 2022-23 marketing year.

Indonesia, the world's biggest palm oil producer and exporter, announced a 20% mandatory domestic sales obligation for all palm producers in a bid to cool local cooking oil prices. The effort to limit palm oil exports has upended the global edible oil market by making what is traditionally the cheapest vegetable oil the costliest among the three major edible oils traded across the world. The move boosted Malaysian palm oil futures to a record high of 5,639 ringgit ($1,346.47) per MT.

Farmers are holding back grain and soybean sales in a bet that prices will continue to rise as dry weather in Brazil and Argentina stokes fears of tight global supplies. Crop sales by farmers for the current season were below a year ago in the U.S., Brazil and Argentina, which together account for more than three-quarters of global corn and soy exports, according to Archer-Daniels-Midland Co.

Argentina’s soybean plantings in 2021-22 are expected to total 16.3 million hectares, about 100,000 hectares than previously estimated, the Buenos Aires Grain Exchange said. The country’s crops have been hurt by drought despite recent rains. Crops in Southern Cordoba and Northern Pampas-Western Buenos Aires may see yield losses of up to 30%, which will affect the production projection, currently at 44 MMT, the exchange said in its weekly report.

Japan purchased 22,410 MT of Australian milling wheat. The Philippines purchased around 50,000 MT of Australian feed wheat.

 

CORN: March corn futures reached $6.30 overnight and are poised to end up from last week’s close at $6.16 1/4 amid support from strengthening exports and drought in South America. Initial resistance is seen at the seven-month intraday day high at $6.31 hit earlier this week.

SOYBEANS: March soybeans overnight reached $14.66, topping the previous contract high of $14.56 1/2 posted yesterday. The contract is up from $14.14 1/4 at the end of last week.

WHEAT: March SRW wheat fell as low as $7.74 3/4 overnight, 3/4 cent above yesterday’s low, before bouncing back. The lead contract is still down from $7.80 at the end of last week. Overnight strength in the U.S. dollar has eased this morning, which could help spur corrective buying in wheat.

 

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-mixed

CATTLE: April live cattle are on track for a slight decline this week after ending last week at $142.10. Dollar strength has raised concerns that U.S. beef exports may be hurt, but price weakness in cattle may be limited by the modest premiums the February and April contracts hold to the cash market. Cash cattle averaged $136.97 through yesterday, down 53 cents from last week’s average. Choice cutout values fell another 35 cents yesterday to $289.11, the lowest daily average since Jan. 17, while Select fell 62 cents to $279.10, but movement was again strong at 136 loads.

HOGS: April lean hogs are heading for a weekly decline after the dollar’s surge triggered fund liquidation yesterday, overshadowing strong weekly export sales and continued gains in the CME lean hog index. Today’s cash index is up 55 cents to $79.75, the highest since late October. Pork cutout values surged $3.59 yesterday to $98.19, the highest since Nov. 3 and led by gains of over $7.00 in bellies and hams. Movement was light at about 254 loads. April lean hogs fell $1.775 yesterday to $94.675, down from $94.95 at the end of last week.

 

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