Ahead of the Open | February 1, 2022

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GRAIN CALLS

Corn: 2 to 5 cents higher.

Soybeans: 8 to 12 cents higher.

Wheat: 5 to 11 cents higher.

GENERAL COMMENTS: Front-month soybean futures surpassed $15.00 for the first time since June and corn futures also rose overnight on drought-reduced crop prospects for South America. Wheat futures rebounded from sharp declines yesterday. Crude oil futures are down around $1 but still near seven-year highs. U.S. stock index futures are slightly firmer this morning and the U.S. dollar index is down more than 200 points.

USDA reported daily soybean sales of 132,000 MT to China for 2022-23 and 110,000 MT of corn sales to Mexico for 2021-22.

Crop Consultant Dr. Michael Cordonnier lowered his projection for Brazil’s soybean crop by 4 MMT to 130 MMT and cut his forecast for Argentina soybeans by 1 MMT to 42 MMT, citing the impacts of drought. He holds a neutral to lower bias for both countries. He held his corn production estimates for Argentina and Brazil unchanged at 51 MMT and 112 MMT, respectively. For Brazil, “there was some hope that the soybeans in Rio Grande do Sul could recoup some of the losses if the weather improved, but those hopes largely faded under the extreme temperatures,” Cordonnier said in a weekly report. “Two to three weeks of record or near-record high temperatures have resulted in stunted soybeans, low plant populations, and in some cases dead plants, especially in the sandier soils.”

Traders expect USDA to report soybean crush reached a record 197.5 million bu. in December, based on a Bloomberg survey. That would be up 7 million bu. from November and 4.4 million bu. more than last year. Soyoil stocks are expected to climb to 2.51 billion pounds. Traders anticipate USDA will report corn-for-ethanol use totaled 478.6 million bu., which would be up 9.9 million bu. from November and 46.9 million bu. higher than December 2020.

Japan is seeking 53,957 MT of Canadian and Australian wheat in its weekly tender. Tunisia tendered to buy 100,000 MT of wheat, 75,000 MT of durum and 75,000 MT of feed barley – all optional origin.

 

CORN: March corn traded within yesterday’s range overnight. The lead contract posted a contract high at $6.42 1/2 yesterday before tumbling to losses on profit-taking and spillover from a selloff in wheat.

SOYBEANS: March soybean futures overnight reached $15.03 1/2 after surging 20 1/2 cents yesterday to $14.90 1/2, the highest closing price for a nearby contract since prices topped $15.00 in June.

WHEAT: March SRW wheat traded within Monday’s range after dropping 25 cents yesterday to $7.61 1/4, the contract’s lowest closing price since $7.41 1/2 on Jan. 14. Prices continue to ebb and flow as traders closely monitor the Russia/Ukraine situation.

 

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firm

CATTLE: Live cattle futures may gain support from USDA’s Cattle Inventory Report, which estimated the U.S. herd as of Jan. 1 totaled 91.9 million head, down 2.0% from the same date a year earlier and about 762,000 head below expectations. Other categories in the report were also below expectations, including beef cow inventory, which dropped 719,000 head (2.3%) from last year. Market focus will shift to this week’s cash trade once the USDA data is factored into prices. Live steers last week averaged $136.95, down 55 cents from the previous week and the sixth weekly decline in the past seven weeks. April live cattle yesterday jumped $1.425 to $144.525, the contract’s highest close since Dec. 31. March feeder cattle rallied $3.40 to $163.025.

HOGS: Lean hog futures may extend yesterday’s gains on firmer cash fundamentals and signs meatpackers are returning to normal processing levels after Covid-related slowdowns last month. Yesterday’s hog slaughter was an estimated 475,000, up 27,000 from one week ago and down 2,000 from a year ago. The CME lean hog index is up $1.54 to $82.15. Pork cutout values fell $1.88 yesterday to an average of $94.51, though movement was decent at 352 loads. April lean hogs yesterday rose 77.5 cents to $95.70.

 

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