Ahead of the Open | January 27, 2022
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: Steady to 2 cents higher.
Wheat: HRW and SRW 10 to 12 cents lower, spring wheat 2 to 5 cents lower.
GENERAL COMMENTS: Soybean futures pulled back from fresh contract highs overnight as the U.S. dollar surged to 19-month highs. Corn and wheat fell, though ongoing Russia/Ukraine tension limited declines. Malaysian palm oil futures rose a third session and posted a record high, while crude oil futures also climbed and remained near a seven-year high. U.S. stock index futures are slightly firmer this morning.
The U.S. dollar hit multi-week highs against other major currencies, after Federal Reserve Chair Jerome Powell suggested the central bank would begin hiking U.S. rates in March. The Fed’s policy-setting committee, following a two-day meeting that ended yesterday, kept its benchmark funds rate unchanged. But Powell afterward told reporters there was “quite a bit of room to raise interest rates without threatening the labor market.”
Russia’s Interfax news agency reports the country’s ag ministry has halted grain sales from the state intervention fund, without providing any details.
South African farmers are expected to reduce corn plantings 5.3% from last year due to excessive rain during the planting season, the government’s Crop Estimates Committee (CEC) said. The CEC forecast a 6.9% drop in white corn plantings and a 2.8% decline in yellow corn plantings. Overall, farmers were expected to plant 2.61 million hectares to corn, down from 2.76 million hectares in 2021.
Japan purchased 25,431 MT of Australian wheat in its weekly tender.
CORN: UDSA reported net 2021-22 U.S. corn sales of 1.402 MMT for the week ended Jan. 20, up 29% from the previous week and up 84% from the average for the previous four weeks. Weekly exports totaling 1.437 MMT, a marketing-year high, were up 11% from the previous week and up 36% from the prior four-week average. Sales topped trade expectations ranging 600,000 MT to 1.2 MMT.
SOYBEANS: Net weekly U.S. soybeans sales for 2021-22 totaled 1.026 MMT, up 53% from the previous week and up 77% from the prior four-week average. Lead buyers included China (540,200 MT, including 132,000 MT switched from unknown destinations and decreases of 2,600 MT) and Mexico (345,300 MT, including decreases of 67,200 MT). Sales expectations ranged from 500,000 MT to 1.3 MMT.
Overnight, March soybean futures reached a contract high at $14.49 1/4, surpassing the previous contract high of $14.45 1/2 set in May.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firm
CATTLE: Live cattle could see followthrough strength from yesterday’s gains and firmer technicals, though the U.S. dollar surge may give buyers pause. Cattle futures filled Monday’s chart gaps with yesterday’s strong corrective gains, and traders will watch cash and wholesale beef for directional cues. USDA reported live steers averaging just under $137.00 at mid-week, steady to weaker with last week’s trade. Most feedlots are seeking higher prices, but packers will likely be reluctant to raise bids. Choice cutout values fell $2.92 yesterday to $289.46 but movement was relatively strong at 132 loads. Net weekly beef sales totaled 14,300 MT for 2022, primarily for South Korea (6,200 MT, including decreases of 400 MT) and Japan (3,900 MT, including decreases of 500 MT). April live cattle rose $1.80 yesterday to $141.90 and March feeder cattle rose 95 cents to $160.80.
HOGS: April lean hogs posted a contract high yesterday before closing lower, the first decline in eight sessions and signaling the potential for further corrective pullback. Continued strength in cash fundamentals should limit any weakness. The CME lean hog index is up 75 cents at $79.20, the highest since early November. Pork cutout values rose $2.14 yesterday to $94.60, led by a jump of over $10 in hams. Movement totaled about 314 loads. April lean hogs fell 80 cents to yesterday to $96.45. Net weekly pork sales totaled 49,100 MT for 2022, led by Mexico (17,300 MT, including decreases of 300 MT), China (16,900 MT, including decreases of 200 MT) and Canada (3,000 MT, including decreases of 500 MT).
