Ahead of the Open | February 17, 2022

GRAIN CALLS

Corn: 2 to 5 cents higher.

Soybeans: 12 to 17 cents higher.

Wheat: HRW and SRW 7 to 9 cents higher, spring wheat 1 cent lower to 2 cents higher.

GENERAL COMMENTS: Soybean futures rose overnight to the highest levels in a week on expectations for crop losses in South America, while corn and wheat also firmed as traders watched Russia/Ukraine tensions. Malaysian palm oil futures rose for the first time in three days while Nymex crude oil is down more than $1. U.S. stock index futures are up slightly and the U.S. dollar index is about 80 points higher.

Markets continue to receive mixed signals on the Russia/Ukraine standoff. Satellite images this week showed heightened military activity in Belarus, Crimea and western Russia. The Biden administration last night said it believes Russia’s claims of withdrawing troops from near Ukraine are “false.” Moscow has in fact increased its presence on the border “by as many as 7,000 troops” in recent days, a senior administration official said.

In Brazil’s Santa Catarina and Rio Grande do Sul states, warm to hot temperatures will continue through the next week and stress to crops will rise before forecast cooler temperatures and rain late next week should bring relief to crops, World Weather Inc. said today. “Next week’s rain will be important in increasing soil moisture for winter crops as well as for summer crops that are still viable while some crops have been damaged too seriously to benefit from the rain.”

In a reversal of normal trade patterns, Argentine farmers could occasionally make soybean sales to processing plants in drought-afflicted Paraguay, Argentina’s CIARA-CEC chamber of oilseed crushers and export companies said. CIARA-CEC said soy exports to Paraguay would likely be sporadic. At the end of last year, 45% of Argentine crushing plants were idle and that figure could rise, he added.

USDA Secretary Tom Vilsack wants the Department of Justice (DOJ) to ensure seed companies and other input suppliers are not using their market power and current conditions to raise prices unfairly. “It’s important for us to ask questions about whether all of these increases… (are) justified based on disruptions, based on supply, based on the normal economics,” Vilsack said during an appearance at the National Association of State Departments of Agriculture’s (NASDA) 2022 Winter Policy Conference.

Japan purchased 54,692 MT of U.S. milling wheat in its weekly tender. Algeria bought at least 300,000 MT of optional origin milling wheat. The Philippines purchased 45,000 MT of Australian feed wheat. Egypt tendered for an unspecified amount of wheat from multiple origins, with results of the snap tendered expected later this morning.

CORN: USDA reported net U.S. corn sales of 820,000 MT during the week ended Feb. 10 for the 2021-22 marketing year, up 39% from the previous week but down 23% from the average for the previous four weeks. For 2022-23, net sales totaled 113,500 MT. The sales numbers were within trade expectations ranging from 500,000 to 1 MMT for 2021-22 and zero to 250,000 MT in the 2022-23 marketing year.

SOYBEANS: Net weekly U.S. soybean sales of 1.362 MMT for 2021-22 were down 15% from the previous week but up 26% from the prior four-week average. Top buyers included “unknown destinations” (371,700 MT) and China (224,500 MT, including decreases of 2,300 MT). For 2022-23, net sales totaled 1.526 MMT, including 876,000 MT for China. Sales were within trade expectations ranging from 750,000 MT to 1.8 MMT for 2021-22 and 800,000 MT to 1.5 MMT for 2022-23.

USDA also reported daily soybean sales of 120,000 MT to unknown destinations for 2021-22. Since Jan. 28, USDA has reported a combined 3.32 MMT of soybean sales to China or unknown destinations. March soybeans overnight rose as high as $16.06, the highest intraday price since the contract high of $16.33 on Feb. 10.

WHEAT: Net weekly wheat sales of 118,100 MT for 2021-22 were up 39% from the previous week but down 61% from the prior four-week average. For 2022-23, net sales totaled 10,500 MT. Old-crop sales were at the low end of trade expectations ranging from 75,000 to 500,000 MT.

LIVESTOCK CALLS

CATTLE: Steady-mixed

HOGS: Steady-firmer

CATTLE: Cattle futures face mixed signals as wholesale beef prices extended a month-long slump while cash prices continue to strengthen. Cash cattle trading has quiet so far this week, with unconfirmed talk of $142 trade in Kansas and feedlots asking $142 to $143 for showlist supplies in the Southern Plains, up from last week’s $140.48 average. Packers continue to cut wholesale beef prices in an effort to move product. Choice cutout values dropped 75 cents yesterday to $269.62, the lowest since Jan. 6. Movement totaled 111 loads.

USDA reported net weekly U.S. beef sales of 23,000 MT for 2022, up 18% from the previous week and up 38% from the prior four-week average. April live cattle rose 2.5 cents yesterday to $146.925. March feeder cattle fell $1.275 to $167.45.

HOGS: Lean hog futures may continue recent gains behind robust cash fundamentals. The CME lean hog index is up another $1.51 today to $93.35, the highest since early October, and has surged $21.50 since the beginning of the year. The index maintained a roughly $10 to $12 premium over year-ago through January, but that has extended to nearly $17, as slaughter data signals hog supplies are down even more than USDA’s market hog inventories suggested in the December Hogs & Pigs Report. Pork cutout values fell 20 cents yesterday to $106.52 but are still near a four-month high reached Feb. 11. Movement was relatively light at 231 loads. Net weekly pork export sales of 18,300 MT for 2022 were up 1% from the previous week but down 46% from the prior four-week average.

April lean hog futures rose $1.25 yesterday to $105.40, the highest settlement for a nearby contract since prices topped $110.00 last August. Key upside targets include the contract high of $107.70 posted Feb. 10. Support is seen at yesterday’s low of $101.00.