Market Snapshot | January 25, 2022

Corn futures are around 7 cents higher at midmorning and near seven-month highs.

• Corn extended its recent rally to reach the highest levels since mid-June, as a continuing rally in the wheat market overshadowed a wetter outlook for South America.
• Paraguay and far southern Brazil will receive significant rain and relief from dryness today through Friday with additional opportunities for rain through the first week of February, World Weather Inc. said. “Crops that have not been too badly harmed by hot and dry weather should see an increase in yield potentials,” the forecaster said.
• Crop Consultant Dr. Michael Cordonnier kept his Argentina and Brazil crop production estimates unchanged after rains reached key crop areas. He estimates Brazilian and Argentine corn production at 112 MT and 51 MMT, respectively.
• March corn reached $6.28 3/4, the contract’s highest intraday price since $6.33 on June 10. The market has built chart momentum over the past week that may have bulls targeting the contract high at $6.40 1/2, hit May 7.
• New-crop December futures posted a contract high for the second day in a row, hitting $5.71.

Soy complex futures are mostly higher after erasing overnight gains; soybeans are up 3 to 8 cents and soyoil is up around 50 points, while nearby soymeal is down around $1.00.

• Soybeans fell overnight on expectations for rain relief in dry areas of South America but bounced back as corn and wheat markets climbed.
• Much of Argentina will receive additional rain through Thursday, inducing further improvements in crop and soil conditions, World Weather said today.
• Cordonnier maintained his estimates for Brazilian and Argentine soybean production at 134 MMT and 43 MMT, respectively. He lowered his soybean estimate for Paraguay by 1 MMT to 6 MMT.
• March soybeans are trading within yesterday’s range after falling as low as $13.93 1/4 overnight. Initial support is seen at the 20-day moving average at $13.83 and at yesterday’s low of $13.82 1/2. Resistance levels include last week’s seven-month high at $14.29 1/2.

Wheat futures are higher, led by gains of 15 to 16 cents in nearby SRW contracts.

• Winter wheat futures climbed to the highest levels in four weeks amid ongoing concerns a potential Russia invasion of Ukraine may disrupt the global wheat trade.
• HRW wheat deteriorated further as drought in the U.S. Plains persisted, individual state crop conditions ratings released yesterday showed.
• The “good” to “excellent” ratings for HRW wheat dropped to 30% for Kansas (down three points from the end of December), 7% for Texas (didn’t update in December), 16% for Oklahoma (down four points), 20% for Colorado (down five points) and 36% for Nebraska (down three points). When the individual state HRW crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500 point scale, with 500 being perfect), the HRW crop fell to 270.4, down 54.1 points from the end of November when USDA released its final national ratings until spring.
• China’s use of wheat in feed rations is expected to be far below year-ago levels due to increased corn supplies, reduced corn prices and higher wheat prices. Feed wheat use could fall to between 10 MMT and 24 MMT in 2021-22, down from more than 40 MMT the previous year, according to Reuters.
• March SRW wheat rose as high as $8.20, the highest intraday price since $8.24 on Dec. 27. March HRW wheat reached $8.36 3/4, the highest since $8.50 3/4 on Dec. 28. March spring wheat touched a three-week high at $9.59 1/2.

Live cattle futures are narrowly mixed. Feeder cattle are sharply lower.

• Live cattle futures extended recent weakness on pressure from weakening technicals and slumping U.S. stocks but have come off their earlier lows.
• Choice cutout values rose $1.09 yesterday to $293.50, the highest since Sept. 30. But movement was light at 80 loads, suggesting retailers have secured near-term needs after actively buying beef in the weeks following the holidays.
• Last week’s cash cattle price averaged $137.50, up 89 cents from the previous week.
• April live cattle yesterday fell as low as $139.375, the lowest intraday price since $138.725 on Nov. 5.
• USDA yesterday reported frozen beef stocks rose 13.4 million lbs. in December, to 503.8 million pounds as of Dec. 31, higher than the average 8.8-million-lb. increase for the month the previous five years.

Lean hog futures are higher at midmorning, posting fresh contract highs.

• Hog futures rose for the sixth consecutive day on technical strength and firming cash fundamentals.
• The latest CME lean hog index rose 81 cents to $78.32, the highest since November.
• Pork cutout values rose $2.37 yesterday to $95.66, as a gain of nearly $11 in bellies helped lift the average to a 2 1/2-month high. Movement totaled 342 loads.
• USDA reported pork stocks fell 3.2 million lbs. in December to 398.9 million lbs., smaller than the five-year average decline of 12.8-million-lbs. for the month.
• April lean hogs reached a contract high at $97.15, a gain of nearly $12 since Jan. 13, while February futures touched $87.725, the highest for a nearby contract since mid-October.