Ahead of the Open | February 11, 2022

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GRAIN CALLS

Corn: 3 to 4 cents higher.

Soybeans: 11 to 13 cents higher.

Wheat: 5 to 10 cents higher.

GENERAL COMMENTS: Soybean futures rebounded overnight and are poised for a fourth consecutive weekly gain. Corn and wheat futures also firmed. Malaysian palm oil futures fell for a second straight week amid expectations for sluggish exports. Nymex crude oil gained around $1.00 but are down for the week. U.S. stock index futures are slightly firmer this morning and the U.S. dollar index is about 250 points higher.

USDA reported daily sales of 108,000 MT of soybeans for delivery to China during the 2022-23 marketing year, 128,000 MT of corn for delivery to Japan during 2021-22 and 30,000 MT of soybean oil for delivery to “unknown destinations” during 2021-22. Since Jan. 28, USDA has reported a combined 3.07 MMT of soybean sales to China or unknown destinations.

Russia’s wheat export tax for Feb. 16-22 will be $92.80 per MT, based on an indicative price of $332.70 per MT. The wheat export tax has dropped five straight weeks and is down from the peak rate of $98.20 per MT in mid-January but is still 230% higher than the initial rate of $28.10 per MT at the beginning of June when Russia started using the sliding scale.

China’s sow herd fell 2.9% at the end of December compared to the previous quarter, the country’s ag ministry said. But the herd at 43.3 million head was 4% greater than Dec. 31, 2020. China’s pig herd at the end of December was up 10.5% from the previous year, at 449.22 million head and 2.6% bigger than the third quarter.

China is aiming for meat production of 89 MMT by 2025, growing by an annual average of 2.8% from the 77.5 MMT produced in 2020, a cabinet document showed on Friday. Under the plan, pork production would be about 55 MMT, with output at 22 MMT for poultry meat, 6.8 MMT for beef and 5 MMT for lamb. The five-year plan to modernize agriculture follows a blueprint issued last month for development of the livestock sector over that period.

 

CORN: March corn futures rose as high as $6.48 1/2 overnight and is on track to post a weekly gain after ending last week at $6.20 1/2. Bulls will be targeting yesterday’s contract high of $6.62 3/4, the highest intraday price for nearby futures since mid-July. Initial support is around the 10-day moving average at $6.32. Speculative funds hold a large net long position in corn, leaving the market vulnerable to long liquidation if upward momentum stalls.

SOYBEANS: March soybeans overnight reached $15.92 1/4, after dropping 20 1/2 cents yesterday amid fund liquidation. The most-active contract is up from $15.53 1/2 at the end of last week. Upside targets for bulls includes the contract high of $16.33 hit yesterday.

WHEAT: March SRW wheat rose as high as $7.83 1/4 overnight after falling 13 1/2 cents yesterday. The lead contract is on track to close higher on the week after ending last week at $7.63 1/4. Upside targets include a two-week high at $8.01 3/4 reached yesterday. Corn and soybean markets will be key to price direction as traders monitor Russia/Ukraine tension.

 

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-firm

CATTLE: Firmer cash prices are supportive for live cattle futures as market bulls aim for a third consecutive week of gains, though speculative money flow may be more important than fundamentals to close the week. Packers paid as much as $226 for cash cattle in the northern dressed market on Thursday, which would be up $4 from last week. The stronger northern prices encouraged feedlots in the Southern Plains to hold firm on their asking prices for $142, with some holding out for even higher prices. Packers accelerated slaughter this week and are moving strong volumes of beef after cutting prices. Choice cutout values fell 97 cents yesterday to $274.82, the lowest daily average since Jan. 7, though movement was again strong at 158 loads. Despite cash strength, cattle futures ended lower yesterday amid profit-taking and long liquidation across ag commodities. April live cattle fell 95 cents yesterday to $146.875 after rising earlier to a contract high at $148.70.

HOGS: Futures remain underpinned by stronger cash fundamentals but yesterday’s technically bearish close may limit further upside this week. The CME lean hog index is up 52 cents to $87.74, the highest since mid-October. Wholesale pork prices fell yesterday but remain near four-month highs. Pork carcass cutout values dropped $3.36 to an average of $101.48, led by a decline of nearly $22 in hams. Movement was relatively light at 241.64 loads. February lean hogs, which expire Monday and settle against the cash index Wednesday, ended yesterday at a $2.435 premium to today’s cash index quote. 

April lean hogs yesterday posted a bearish “outside day” lower, posting a contract high at $107.70 before dropping to close at $103.425, under the previous day’s low. The contract is still up from $100.075 at the end of last week.

 

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