Ahead of the Open | February 10, 2022

GRAIN CALLS

Corn: 6 to 8 cents higher.

Soybeans: 27 to 32 cents higher.

Wheat: 6 to 12 cents higher.

GENERAL COMMENTS: Soybean futures overnight traded above $16.00 for the first time since last May on further South American crop reductions, while corn and wheat also surged. Malaysian palm oil futures ended lower. U.S. stock index futures are slightly firmer this morning. The U.S. dollar index has firmed more than 300 points this morning.

USDA reported daily soybean sales of 299,700 MT to “unknown destinations,” including 233,700 MT for delivery during the 2021-22 marketing year and 66,000 MT during the 2022-23 marketing year. Since Jan. 28, USDA has reported a combined 2.96 MMT of soybean sales to China or “unknown destinations.” Over the month prior to Jan. 28, sales to China and unknown destinations totaled just 648,000 MT.

Conab slashed its official Brazilian soybean crop estimate by 15 MMT from last month to 125.5 MMT due to drought in the entire southern region of the country and part of Mato Grosso do Sul. The government forecasting agency slashed its 2021-22 soybean export forecast by 9.1 MMT to 80.2 MMT. Conab cut its Brazilian corn crop estimate by 559,000 MT from last month to 112.3 MMT. It now forecasts 2021-22 Brazilian corn exports at 35 MMT, down 1.7 MMT from last month.

The Russian government has reportedly warned shippers to avoid significant portions of the northern end of the Black Sea, as well as the adjacent Sea of Azov due to upcoming naval exercises. This could amount to a de facto blockade of Ukraine’s southern coastlines, which in turn might be part of preparations for new large-scale Russian military intervention into that country.

The U.S. consumer price index soared a higher-than-expected 7.5% in January compared to the same month a year ago, the highest annual reading since February 1982. Stripping out volatile gas and food costs, the core CPI increased 6%. Surging inflation reflects strong demand for an array of goods and services as the economy continues its recovery from the pandemic and reinforces expectations the Federal Reserve will hike interest rates multiple times this year.

Confirmation of the H5N1 strain of highly pathogenic avian influenza on a commercial turkey farm in Dubois County, Indiana, has resulted in trade actions by some importers of U.S. poultry. USDA said it is encouraging countries to follow World Organization for Animal Health standards and minimize trade impacts.

Taiwan purchased one cargo (about 65,000 MT) of Argentine corn. Japan purchased 115,913 MT of wheat in its weekly tender, including 54,684 MT from the U.S., 32,526 MT from Canada and 28,703 MT from Australia.

CORN: USDA reported net U.S. sales of 589,100 MT for the week ended Feb. 3, down 50% from the previous week and down 43% from the average for the previous four weeks. Sales were at the low end of expectations ranging from 500,000 to 900,000 MT in the 2021-22 marketing year. Exports of 1.149 MMT were down 2% from the previous week and down 6% from the prior four-week average.

Overnight, March corn futures rose as high as $6.55 1/2, a contract high and the highest intraday price since mid-July. December futures hit a contract high at $5.94 3/4.

SOYBEANS: Net weekly U.S. soybean sales totaled 1.596 MMT, up 46% from the previous week and up 81% from the four-week average. Top buyers included “unknown destinations” (804,400 MT), China (298,100 MT, including 129,000 MT switched from unknown destinations and decreases of 5,700 MT) and Mexico (211,100 MT, including decreases of 900 MT), Egypt (81,700 MT). Expectations ranged from 900,000 MT to 1.5 MMT.

March soybeans overnight hit $16.28 1/4, a contract high and the highest intraday price for nearby futures since May.

WHEAT: Net weekly U.S. wheat sales for 2021-22 totaled 84,800 MT, up 48% from the previous week but down 75% from the prior four-week average. Sales of 48,400 MT were reported for 2022-23. Exports of 380,900 MT were down 1% from the previous week but up 9% from the four-week average. Sales expectations ranged from 100,000 to 400,000 MT for 2021-22 and 25,000 to 300,000 MT for 2022-23.

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-firmer

CATTLE: Live cattle may extend yesterday’s rally to contract highs on bullish technicals and a firmer cash market. Live steers averaged $140.07 through yesterday morning, up from last week’s average of $139.76, according to USDA reports. Slaughter rates continued to pick up, with this week’s estimated kill so far at 365,000 head up 3,000 from the same period last week. Choice cutout values fell $1.67 yesterday to $275.79, the lowest daily average since Jan. 7, but movement was solid at 132 loads. USDA reported net U.S. beef sales for the week ended Feb. 3 at 19,500 MT for 2022, down 3% from the previous week and down 63% from the average for the previous four weeks.

April live cattle rose $1.65 yesterday to $147.825 after reaching a contract high at $147.925, while nearby futures ended at a six-year high. March feeder cattle rose $1.40 to $168.275.

HOGS: Lean hog futures may gain on followthrough chart strength from a three-day run to fresh contract highs and from strong cash fundamentals. The CME lean hog index reached the highest level since mid-October and is up another 60 cents to $87.22. Wholesale pork market extended recent strength, with cutout values jumping $7.55 yesterday to $104.84, the highest daily average since Oct. 14. But movement was light at 286 loads. Net weekly pork sales of 18,100 MT for 2022 were down 40% from the previous week and down 71% from the prior four-week average. 

April lean hog futures finished 97.5 cents higher yesterday at $104.775 after setting a contract high at $105.475.