Ahead of the Open | January 31, 2022
GRAIN CALLS
Corn: 2 to 6 cents higher.
Soybeans: 13 to 17 cents higher.
Wheat: Steady to 3 cents higher.
GENERAL COMMENTS: Front-month soybean futures neared $15.00 overnight, climbing to the highest levels since June, while corn posted contract highs on expectations drought will curb South American production. Wheat futures also rose. Malaysian palm oil futures climbed to a record high for the third day in a row in the wake of Indonesia’s announcement it will limit exports. Crude oil futures are firmer and near the seven-year highs reached last week. U.S. stock index futures are slightly weaker this morning. The U.S. dollar index is down nearly 400 points this morning.
USDA reported daily soybean sales of 129,000 MT for delivery to China -- 66,000 MT is for delivery during the 2021-22 marketing year and 63,000 MT is for delivery in 2022-23. Today’s announcement follows soybean sales reported Friday for 141,514 MT to Mexico and 251,500 MT to “unknown destinations,” both during the 2021-22 marketing year. USDA also reported a sale of 264,000 MT of soybeans to China during 2022-23 last Friday.
Brazil-based consultancy AgRural slashed its projection for the country’s soybean crop by 4.9 MMT to 128.5 MMT, citing drought in the southern states and Mato Grosso do Sul and excess rain in Mato Grosso. AgRural forecasts the smallest Brazilian soybean yield since 2015-16. As of last Thursday, the firm estimated soybean harvest was 10% complete and safrinha corn planting as 14% done.
Russian wheat export prices fell for a third week running last week, with the ruble still weak against the dollar amid tensions between Moscow and the West over Ukraine. Russian wheat with 12.5% protein content loading from Black Sea ports for supply in March was $325 per MT free on board (FOB) last week, down $1 from the previous week, the IKAR agriculture consultancy said. SovEcon, another consultancy, pegged wheat $1 down at $330 per MT. SovEcon raised its 2021-22 Russian wheat export forecast by 200,000 MT to 34.3 MMT.
CORN: March corn overnight hit at contract high at $6.42 1/2, surpassing the previous contract high at $6.40 1/2, posted in May. The lead contract gained 19 3/4 cents last week and has strong upside momentum with South American weather remaining a market focus.
SOYBEANS: March soybeans overnight reached $14.96 3/4, a contract high for the third consecutive day, after surging 55 3/4 cents last week. The market retains strong upside momentum amid expectations a South America crop shortfall will drive more export business for the U.S.
LIVESTOCK CALLS
CATTLE: Steady-firm
HOGS: Steady-mixed
CATTLE: Live cattle futures may gain on followthrough technical strength from a firm close last week, as the April contract jumped $1.475 Friday to $143.00, up 90 cents for the week. USDA’s semi-annual U.S. Cattle Inventory report after the close today may keep many traders sidelined. The report is expected to show the U.S. cattle herd as of Jan. 1 contracted 1.2% from year-ago, based on an Urner Barry survey. The beef cow inventory and the number of beef replacement heifers are both expected to be down 1.8%, which would signal the beef herd will continue to contract. The 2021 calf crop is expected to be down 0.9% from the previous year. Softer cash fundamentals may limit buying in futures. Choice cutout values ended last week at $290.42, down from $292.41 at the end of the previous week. Movement was light at 77 loads. Live steers last week averaged $136.93 as of Friday morning, down from $137.50 the previous week. Last week’s slaughter was an estimated 643,000 head, up 1.1% over last week and 2.0% under the same week in 2021, indicating recent Covid-driven packing industry slowdowns may be fading.
HOGS: Lean hog futures should be supported by firm cash fundamentals, though volatility late last week suggests the market may be putting in a short-term top. Cash fundamentals continue to strengthen, but nearby futures hold big premiums to the cash index. Outside markets could be the deciding factor in whether futures make a fresh push to the upside or pull back in corrective trade. Pork cutout values ended last week at $96.39, up from $93.29 a week earlier. Movement was relatively light at 248 loads. Today’s CME lean hog index is up 86 cents to $80.61. April lean hog futures rose 25 cents Friday to $94.925, down 2.5 cents for the week.
