Ahead of the Open | February 2, 2022
GRAIN CALLS
Corn: 2 to 5 cents higher.
Soybeans: 24 to 30 cents higher.
Wheat: 5 to 10 cents higher.
GENERAL COMMENTS: Soybean futures rose to contract highs for the fifth straight session on bullish technicals, crop losses in South America and speculative buying. Corn and wheat futures also firmed. Nymex crude oil futures jumped over $1.00 to the highest levels since October 2014. U.S. stock index futures are moderately firmer this morning and the U.S. dollar index dropped to the lowest level in almost a week.
USDA reported sales of 380,000 MT of soybeans for delivery to “unknown destinations” during the 2021-22 marketing year. Today’s announcement follows USDA-reported soybean sales to China or unknown destinations the previous three business days totaling 525,000 MT for 2021-22 and 2022-23.
A major winter storm dropped 1 to 4 inches of snow across much of the HRW wheat belt in the central U.S. Plains and temperatures are expected to nosedive the next two days. “The snow is not likely to accumulate very well in Nebraska or north-central Kansas, where bitter cold is expected Thursday and Friday mornings,” World Weather Inc. said. “Temperatures will slip to the negative and positive single-digits Fahrenheit, which may not be quite cold enough to induce crop damage, especially after recent past cold bouts of air. Livestock stress will be widespread in central Texas, Oklahoma and a part of the southwestern Plains.”
USDA late yesterday reported U.S. soybean crushing at 198.2 million bu. in December, higher than trade expectations and a new monthly record. For the first four months of the 2021-22crop year, crush totaled 749.9 million bu., down from 751.8 million bu. last year. USDA currently projects 2021-22 crush at 2.19 billion bu., meaning the pace the last eight months of the crop year must total 1.44 billion bu. to match USDA’s forecast. Soyoil stocks totaled 2.466 billion lbs., below expectations for about 2.55 billion pounds.
Ukraine has exported 38.6 MMT of grain so far in 2021-22, up 32% from the same period last year. That total included 17 MMT of wheat, 15.6 MMT of corn and 5.5 MMT of barley. Ukraine’s government is reportedly considering cutting the value-added tax (VAT) for ag products from the current 20% rate, which would increase exports from the country. In August, Ukraine restored its VAT for ag products to 20% after lowering it to 14% from March through July last year.
Tunisia purchased about 100,000 MT of soft wheat and 75,000 MT each of durum and feed barley – all to be sourced from optional origins.
CORN: March corn futures overnight rose as high as 6.40 3/4 after gaining 8 3/4 cents yesterday to $6.34 3/4. Initial resistance is seen at the contract high posted Monday at $6.42 1/2, with further resistance at $6.50.
SOYBEANS: March soybeans hit a contract high at $15.64, the highest intraday price for nearby futures since June 2021. Based on the daily continuation chart, upside targets for March soybeans include psychological resistance around $16.00, last June’s high at $16.23 1/2 and a nine-year high of $16.77 1/4, reached in May of last year. StoneX projected Brazil's 2021-22 soybean crop at 126.5 MMT, down 7.5 MMT from the broker's previous forecast of 134 MMT.
LIVESTOCK CALLS
CATTLE: Steady-firmer
HOGS: Steady-firmer
CATTLE: Live cattle futures may extend yesterday’s surge to four-year highs on bullish technicals and indications of firming cash prices. Light cash cattle trade was reported in the $137 to $139 range in the Southern Plains yesterday, $1 to $2 higher than last week. The volume was too light to be considered a true market test, but cash sources signal feedlots have no interest in moving cattle at lower prices, so active trade at firmer prices is expected. Continued strength in futures may bolster feedlots’ bargaining power, though wholesale beef prices have slipped, with Choice cutout values dropping nearly $5.00 yesterday to $285.44.
