Market Snapshot | February 8, 2022

Corn futures are 7 to 8 cents lower in old-crop contracts at midmorning.

• Corn futures fell in a corrective setback from yesterday’s climb to seven-month highs. Weakness in soybeans contributed to the negative tone and traders are also taking some profits out of long positions ahead of USDA’s Supply and Demand Report tomorrow.
• Crop Consultant Dr. Michael Cordonnier kept his Brazilian and Argentine crop estimates unchanged this week, but he has a lower bias for both countries. He projects Brazilian corn production at 112 MMT and Argentine production at 51 MMT.
• 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 in Wednesday’s Supply & Demand Report, based on a Reuters survey.
• Turkey provisionally purchased 325,000 MT of corn from unspecified origins. Taiwan tendered to buy up to 65,000 MT of corn from the U.S., Brazil, Argentina or South Africa.
• March corn futures matched yesterday’s high of $6.36 3/4 overnight before fading. Initial support in March futures is seen at the 10-day moving average of $6.27 1/4 and yesterday’s low at $6.24 3/4. Key resistance is seen at the contract high of $6.42 1/2 posted Jan. 31.

Soy complex futures are mostly lower, led by declines of 16 to 20 cents in old-crop soybeans and nearly 200 points in soyoil; nearby soymeal is down $1 to $2.

• Soybean futures are under corrective pressure in the wake of yesterday’s rally to eight-month highs as traders await USDA’s Supply and Demand Report on Wednesday.
• A recent upturn in export business continued as exporters seek to lock in supplies that won’t be as plentiful as once thought. USDA announced daily soybean sales of 132,000 MT for delivery to China and 332,000 MT for delivery to “unknown destinations,” both during the 2022-23 marketing year. Since Jan. 28, USDA has reported a combined 2.42 MMT of soybean sales to China or unknown destinations.
• Weekend rains across areas of Paraguay came too late to help the drought-damaged soybean crop, prompting Cordonnier to lower cut his Paraguay soybean crop estimate by 1 MMT to 5 MMT, less than half of what the country was originally expected to produce.
• Cordonnier kept his Argentine and Brazilian soybean production estimates unchanged at 42 MMT and 130 MMT, respectively.
• Soybean harvesting remains a struggle in several areas of center and northeastern Brazil due to wet weather, World Weather Inc. said. Rainfall the past week was enough to keep the ground saturated, with flooding noted in portions of Minas Gerais and minor damage was suspected in areas that saw the most severe flooding.
• March soybean futures extended early declines after falling below yesterday’s low at $15.65 1/4, partially closing a chart gap created by a strong overnight open Sunday. Bears will aim to fill the rest of the gap, which extends to Friday’s high at $15.60 1/4.
• Bulls’ are targeting the March contract high of $15.89 1/2 set yesterday, with further upside targets including the psychological $16.00 mark, followed by the June 2021 high of $16.23 1/2, based on the continuation chart.

Wheat futures rebounded from overnight losses, with winter wheat down slightly and spring wheat strongly higher.

• Wheat futures climbed after Canada’s agriculture statistics agency reported a sharp drop in the country’s inventories at the end of last year. Signs of easing in Russia/Ukraine tensions are adding pressure.
• Canada’s wheat stockpiles totaled plunged 15.6 MMT at the end of December, down 38% from the same date in 2020 and nearly 2 MMT smaller than expectations, according to Statistics Canada. The drop reflects poor growing conditions in western Canada.
• USDA in its Feb. 9 Supply and Demand 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.
• March SRW wheat climbed as high as $7.75 after falling as low as $7.54 overnight. Initial resistance is seen at yesterday’s high of $7.76 1/2 and at the 100-day moving average around $7.77 1/2. March spring wheat reached a two-week high at $9.39.

Live cattle futures are mixed at midmorning, while feeder cattle are higher.

• Live cattle futures fell under corrective pressure following yesterday’s rise to contract highs, but the firmer tone in feeder cattle is lending support.
• Choice cutout values fell 85 cents yesterday to a four-week low of $278.96 and movement was light at 80 loads, indicating packers are cutting prices to draw retail interest.
• Packer margins have fallen near a four-week low but remain firmly profitable. Cash cattle prices rose almost $3.00 last week, but if retail demand doesn’t improve packers probably will be reluctant to further increase bids. Live steers averaged $139.76 last week, up from the previous week’s average of $136.95.
• Feeder cattle are gaining support from weakness in corn.
• April live cattle fell as low as $145.225, the lowest intraday price in a week and down from yesterday’s contract high at $147.375, which represents initial resistance.

Lean hog futures are moderately to sharply higher, led by nearby February.

• Firmer cash fundamentals and a tight supply outlook continue to support hog futures. The CME lean hog index is up $1.57 to $85.87, the highest since Oct. 19.
• Pork cutout values rose 78 cents yesterday to $98.19, matching a two-month high reached Jan. 27. Movement totaled 337 loads.
• February futures widened their premium to the index, currently about $3.33, though the cash market’s gains on the lead contract may continue to stir additional buyer interest. However, deferred hog futures are overbought technically and may come under near-term corrective selling.
• April lean hogs are trading within yesterday’s range, from a low of $100.30 to the contract high at $102.85.