Ahead of the Open | February 3, 2022

GRAIN CALLS

Corn: 5 to 7 cents lower.

Soybeans: 11 to 13 cents lower.

Wheat: 5 to 10 cents lower.

GENERAL COMMENTS: Corn futures fell overnight to the lowest levels in more than a week on corrective pressure following the recent rally, while wheat and soybeans also fell. Nymex crude oil futures fell after hitting seven-year highs yesterday. The U.S. dollar index has turned lower after showing strength overnight.

Malaysian palm oil futures ended lower following the Lunar New Year break but selling pressure was limited due to Indonesia's new mandate for 20% of domestic output to be sold at home. The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed 1.2% lower at 5,523 ringgit ($1,314.68) per MT. The contract hit a record high of 5,700 ringgit a MT at the end of January, and price support is expected to remain steady as market participants assess the impact of a new sales mandate from the world's largest palm oil producer and exporter.

Ukraine expects to export 65.5 MMT of grain in 2021-22, up 300,000 MT from its prior forecast. The ag ministry did not give a breakdown of exports by commodity, though barley shipments have already exceeded the previously forecast level by 300,000 MT. As we reported yesterday, Ukraine’s grain exports to date are running nearly 32% ahead of year-ago.

Global food prices measured by the United Nation’s Food and Agriculture Organization (FAO) increased 1.1% in January, led by gains in vegoils, which hit a record high, and dairy. The FAO food price index at 135.7 was the highest since April 2011 and only 1.9 points (1.4%) below the all-time high of 137.6 in February 2011. Compared to year-ago, prices are up 12.5% for cereal grains, 34% for vegoils, 19% for dairy, 17% for meat and 20% for dairy.

Japan purchased 53,957 MT of wheat from its weekly tender, including 26,807 MT from Canada and 27,150 MT from Australia.

CORN: USDA reported net U.S. corn sales of 1.175 MMT for the week ended Jan. 27, down 16% from the previous week but up 47% from the average for the previous four weeks. Sales were expected to range from 600,000 MT to 1.3 million MMT. Exports of 1.177 MMT were down 19% from the previous week and down 1% from the prior four-week average. USDA reported daily corn sales cancellations of 380,000 MT to China for 2021-22. March corn futures overnight fell as low as $6.14 1/2 after gaining 8 3/4 cents yesterday to $6.34 3/4.

SOYBEANS: Net weekly U.S. soybean sales for 2021-22 totaled 1.096 MMT, up 7% from the previous week and up 56% from the prior four-week average. Top buyers included Mexico (356,600 MT, including decreases of 44,500 MT), Egypt (135,000 MT) and the Netherlands (132,000 MT, including 120,000 MT switched from “unknown destinations”). Net sales of 881,800 MT for 2022-23 included China (660,000 MT) and unknown destinations (132,000 MT). Sales for 2021-22 were expected at 600,000 MT to 1.2 MMT.

WHEAT: Net weekly wheat sales totaled 57,500 MT for 2021-22, the second-lowest for the 2021-22 marketing year. Sales were down 92% from the previous week and down 83% from the prior four-week average. Exports of 383,600 MT were up 6% from the previous week and up 26% from the prior four-week average. Sales for 2021-22 were expected at 200,000 to 675,000 MT.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firm

CATTLE: Live cattle may find support on followthrough technical strength from yesterday’s rally to contract highs and strengthening cash prices. USDA reported live steers at an average of $139.96 through yesterday morning, up about $3.00 from last week’s average. But slumping wholesale beef may limit futures gains as packers cut prices to draw retailer demand. Choice cutout values fell $2.29 yesterday to $283.15, near a three-week low. Movement was relatively strong at 130 loads. April live cattle rose $1.525 yesterday to $146.90 after reaching a contract high at $146.95. February futures gained 82.5 cents to $141.125, the highest close for a nearby contract since March 2016.

USDA reported net weekly U.S. beef sales of 20,100 MT for 2022, primarily for Japan (11,800 MT, including decreases of 600 MT), South Korea (3,500 MT, including decreases of 800 MT) and Taiwan (1,600 MT, including decreases of 100 MT).

HOGS: Lean hogs may see support on followthrough chart strength from yesterday’s contract highs and strengthening cash fundamentals. The next CME Lean Hog Index is up 15 cents to $83.29, the highest since Oct. 21. Pork cutout values rose firmed $3.47 yesterday to an average of $96.44, led by a gain of over $10 in hams. Movement totaled about 295 loads. While packers are reducing wholesale beef prices to move product, there appears to be ample pork demand to support current prices. April lean hogs yesterday rose $1.45 to $99.125 after posting a contract high at $100.275.

Net weekly pork sales totaled 30,400 MT for 2022, with lead buyers including Mexico (20,700 MT, including decreases of 300 MT), Japan (6,000 MT, including decreases of 700 MT) and Canada (1,500 MT, including decreases of 400 MT).