Market Snapshot | February 4, 2022

Corn futures are narrowly mixed at midmorning and trading inside yesterday’s range.

• Corn futures are heading for the first weekly decline in the past three weeks. Weakness in soybeans is lending pressure.
• Prices are consolidating as the market readies for USDA’s monthly Supply and Demand Report Feb. 9. USDA is expected to cut its Brazil corn crop estimate to 113.63 MMT from 115 MMT and its Argentina corn estimate to 52.16 MMT from 54 MMT, based on a Reuters survey of analysts.
• March corn futures fell as low as $6.13 3/4 and are down from $6.36 at the end of last week. Futures remain in a nearly five-month uptrend, but upside momentum faltered this week and the market may be vulnerable to further long liquidation.
• Initial support in March futures is seen at yesterday’s low of $6.10 1/4, along with the 40- and 50-day moving averages at $6.05 1/4 and $6.00 1/2, respectively. Resistance comes in at the nine-month high posted Jan. 31 at $6.42 1/2.

Soy complex futures are mixed, with nearby soybeans down around 7 cents and nearby soyoil down around 50 points; nearby soymeal is up about $1.

• Soybean futures faded from an overnight climb toward contract highs reached earlier this week. The drought-reduced South American crop outlook remains a supportive factor, but crop losses are likely reflected in current price levels.
• In its Feb. 9 report, USDA is expected to lower its projection for Brazilian soybean production to 133.65 MMT from 139 MMT, based on the Reuters survey. Argentina’s crop estimate is expected to be cut to 44.51 MMT from 46.5 MMT.
• USDA reported daily soybean sales of 295,000 MT to unknown destinations, including 252,000 MT for 2021-22 and 43,000 MT for 2022-23.
• March soybeans fell as low as $15.32 after rising overnight to $15.60 1/4, just 3 3/4 cents under the contract high posted Feb. 2 and still up from $14.70 at the end of last week.
• Sharp gains over the past week sent futures into overbought conditions, which may make the market vulnerable to long liquidation. March futures currently exceed 76 on the Relative Strength Index.
• Initial support in March soybeans is seen at yesterday’s low at $15.29, while resistance is pegged at the contract high at $15.64. A push above the contract high may have bulls targeting $16.00 level, then last year’s continuation chart highs around $16.30 and $16.77.

Wheat futures are slighlty higher, led by gains of 5 to 7 cents in HRW contracts.

• HRW wheat futures are up in a corrective bounce from yesterday’s drop to the lowest prices in over two weeks, with expanding drought in the U.S. Plains also supportive. A soft export pace continues to weigh on wheat futures after a sharp drop in USDA-reported weekly sales.
• In the Plains HRW belt, little precipitation is expected the next two weeks, which will lead to a continuation of drought conditions, World Weather Inc. said today. “Completely dry weather is unlikely. There will be some occasional shower activity; however, the general pattern of unusual dryness will continue. The need for greater moisture will be increasing later in February as spring gets closer.”
• March SRW wheat fell as low as $7.48 1/4 and is down from $7.86 1/4 at the end of last week. March HRW rose as high as $7.81 3/4 but is still down from $8.02 1/4 at the end of last week.

Cattle futures are mostly lower at mid-morning and trading in narrow ranges.

• Live cattle are under mild followthrough pressure from yesterday’s weak close, the first losses in five sessions. Stronger cash is adding support.
• Cash cattle strengthened this week as meatpackers boosted slaughter rates, but continued weakness in boxed beef indicates packers are lowering their prices to move product.
• Choice cutout values fell $1.69 yesterday to $281.46, a three-week low, though movement remained relatively strong at 134 loads.
• USDA-reported live steers averaged $139.99 so far this week, up about $3.00 from last week.
• April live cattle are trading within yesterday’s contract high at $147.275 and low at $145.80. A break above resistance at the contract high may have bulls targeting resistance at $150.00.

Lean hog futures are higher, led by the most-active April contract.

• Hog futures continue to find support from firmer cash fundamentals and signs packers are returning to normal processing levels after Covid-related slowdowns last month.
• The CME Lean Hog Index is up 4 cents to $83.33, the highest since Oct. 21 but a smaller increase than the sharp gains posted late last week and early this week.
• Slaughter continues to lag, with the estimated kill so far this week at 1.811 million head, down 58,000 head from the same period last week.
• Pork cutout values rose 77 cents yesterday to $97.21 on movement of about 295 loads.