Market Snapshot | February 7, 2022

Corn futures are 13 to 14 cents higher in nearby contracts at midmorning.

• Corn futures firmed as the soybean market surged to contract highs amid ongoing expectations for drought-driven crop shortfalls in South America.
• Several private analysts scaled back production forecasts for Argentina and Brazil in recent weeks, and USDA is expected to follow suit in its next Supply and Demand Report on Wednesday. USDA is expected to cut its Brazil corn crop estimate to 113.63 MMT from 115 MMT and its Argentina corn estimate to 52.16 MMT from 54 MMT, based on a Reuters survey.
• USDA reported 1.053 MMT of corn inspected for export during the week ended Feb. 3, up from 1.036 MMT the previous week. Expectations ranged from 975,000 MT to 1.3 MMT.
• March corn futures gapped higher at the start of overnight trade and rose as high as $6.34 1/4 so far this morning. Key resistance is seen at the contract high of $6.42 1/2 posted Jan. 31. Sellers will be aiming to close the overnight gap between Friday’s high at $6.23 1/4 and today’s low at $6.24 3/4.

Soy complex futures are sharply higher, led by gains of over 30 cents in old-crop soybeans and $10-plus in soymeal.

• Soybean and soymeal futures rallied to contract highs on fresh export business and expectations adverse weather will shrink South American production.
• Heavy rain fell on the driest areas from Paraguay into western Parana over the weekend, inducing significant improvements in crop and soil conditions, though the driest areas in western and southern Rio Grande do Sul in Brazil “were mostly dry and saw rising levels of crop stress,” World Weather Inc. said.
• USDA announced daily soybean sales totaling 507,000 MT to “unknown destinations,” with 249,000 MT for 2021-22 and 258,000 MT for 2022-23. China is believed to be the buyer. Since Jan. 28, USDA has reported a combined 1.96 MMT of soybean sales to China or unknown destinations.
• Also today, USDA reported 1.218 MMT of soybeans inspected for export during the week ended Feb. 3, down from 1.416 MMT the previous week. Expectations ranged from to 1.0 to 1.85 MMT.
• In its Feb. 9 report, USDA is expected to lower its projection for Brazilian soybean production to 133.65 MMT from 139 MMT, based on Reuters survey. Argentina’s crop estimate is expected to be cut to 44.51 MMT from 46.5 MMT.

• Large speculators increased their bullish bets in the soybean market in late January to the highest level since May, according to the Commodity Futures Trading Commission’s Commitments of Traders report. The managed money net long in soybean futures and options jumped 39,593 contracts to 172,822 contracts for the week ended Feb. 1, the highest since the week ended May 11.
• March soybeans gapped higher at the outset of overnight trade and climbed as high as $15.86 1/2 this morning, the highest for a nearby contract since prices topped $16.00 last June.
• Upside targets for soybean bulls include $16.00, then last year’s continuation chart highs around $16.30 and $16.77. Initial support is seen at the overnight gap between Friday’s high at $15.60 1/4 and today’s low at $15.65 1/4.
• March soymeal reached $454.50 per ton, a contract high and the highest intraday price for nearby futures since mid-May.

Wheat futures are higher but have trimmed earlier gains.

• HRW wheat futures are higher with support from rallying soybeans, concerns over expanding drought in the U.S. Plains. Russia/Ukraine tensions continue to be closely followed.
• Dryness in the Plains HRW belt will continue through Feb. 16, when a more active weather pattern arrives Feb. 18-22, which “may be the best opportunity in the next two weeks for some meaningful moisture in the region,” World Weather said. “The precipitation may not be enough to have much impact on drought status, but any moisture would be welcome.”
• USDA reported 417,750 MT (15.4 million bu.) of wheat inspected for export during the week ended Feb. 3, up from 376,524 MT the previous week. Expectations ranged from 250,000 MT to 450,000 MT.
• USDA, in its Feb. 9 report, is expected to lower its 2021-22 global ending wheat stocks estimate by about 60,000 MT, to 279.89 MMT, underscoring tight supplies for milling-quality wheat.
• Large speculators boosted their bearish bets in the wheat market as prices fell in late January. The managed money’ net short in SRW wheat futures and options increased 13,025 contracts to 26,452 contracts for the week ended Feb. 1, according to the CFTC.
• March SRW wheat overnight reached $7.76 1/2 after gaining 11 1/2 cents Friday to $7.63 1/4.

Live cattle futures are choppy at midmorning, while feeder cattle are under pressure.

• Live cattle are choppy amid spillover support from lean hogs and weakness in feeder cattle.
• Feeder cattle are being pressured by strong gains in corn.
• Cash cattle strengthened last week as meatpackers boosted slaughter rates, but boxed beef prices remain under pressure, indicating packers are cutting their prices to move product.
• USDA-reported live steers averaged $139.88 through Friday morning, up from the previous week’s average of $136.95.
• Choice cutout values fell $1.65 Friday to $279.81, down sharply from $290.42 at the end of last week.
• April live cattle futures, which jumped $3.775 last week, face initial resistance at the contract high of $147.274, posted Feb. 3.

Lean hog futures are sharply higher, led by April and May contracts.

• Hog futures continue to find support from firmer cash fundamentals and tight supply outlook. The CME lean hog index is up 97 cents to $84.30, the highest since mid-October.
• The index premium to nearby February futures is only somewhat limiting buying in the lead contract.
• Pork cutout values rose 20 cents Friday to an average of $97.41, up from $96.39 at the end of last week.
• Packers slaughtered an estimated 2.436 million head last week, down 8.9% from year-ago levels. So far this year, slaughter trails comparable 2021 levels by 11%, suggesting hog supplies may contract below year-ago levels more than the widely anticipated 6.0% decline.
• April lean hogs reached a contract high at $102.675, the fourth contract high posted in the past five sessions.