Ahead of the Open | February 16, 2022

GRAIN CALLS

Corn: Steady to 3 cents higher.

Soybeans: 10 to 12 cents higher.

Wheat: 1 cent lower to 2 cents higher.

GENERAL COMMENTS: Soybean futures rose overnight on lingering concerns over crop damage in South America, while corn and wheat also firmed as traders watched Russia/Ukraine tensions. Malaysian palm oil futures fell on signs of stronger production. Nymex crude oil is up more than $1 while U.S. stock index futures are down slightly. The U.S. dollar index is about 100 points lower.

USDA reported a daily sale of 132,000 MT of soybeans for delivery to China during the 2022-23 marketing year. Since Jan. 28, USDA has reported a combined 3.2 MMT of soybean sales to China or unknown destinations.

Russian President Vladimir Putin, after a meeting with German Chancellor Olaf Scholz in Moscow, said that although the U.S. and other NATO members have yet to provide a satisfactory answer to Russia’s demands, there was room to follow the negotiation track. Large-scale exercises involving land, sea and air units were ongoing, but Russia announced this morning that more troops would be returning to their bases, though NATO Secretary General Jens Stoltenberg said there’s no proof of de-escalation.

China can reduce its soybean demand by 30 MMT by continuing to promote lower soymeal rations in feed and using alternative proteins, the official Xinhua news agency reported, citing unnamed agriculture officials. After China issued guidelines last year recommending the reduction of soymeal use, the portion of soymeal in feed reportedly dropped to an average 15.3%, down 2.4 percentage points from 2020.

Paraguay’s crushing industry will run out of soybeans to process by the middle of the year due to a drought, the country’s soy crushers association told Reuters. The Paraguayan Chamber of Oilseed and Cereal Processors, which represents major commodity companies such as ADM, Bunge and Cargill, has petitioned the government to approve a tax exemption to enable soybean imports for crushing.

Indiana reported a “presumptive-positive case” of H5 bird flu at a commercial turkey farm in Dubois County. The Indiana Board of Animal Health is awaiting confirmatory test results from a USDA lab. The expected outbreak was in a flock of 26,473 turkeys and depopulation is ongoing.

Jordan tendered to buy 120,000 MT of optional origin milling wheat. Iran tendered to buy 60,000 MT each of corn, soymeal and feed barley from unspecified origins. Japan received no offers in its tender for 80,000 MT of feed wheat and 100,000 MT of feed barley. Syria made no purchase in its tender to buy 200,000 MT of milling wheat.

CORN: March corn futures overnight fell as low as $6.36 1/4, 3/4 cent above yesterday’s low of $6.35 1/2, before mildly rebounding. Upside momentum has slowed since March corn posted a contract high at $6.62 3/4 Feb. 10 and the market may be vulnerable to further fund liquidation. Initial support includes yesterday’s low and the February low of $6.10 1/4. Soybeans will continue to be a key influencer for corn prices.

SOYBEANS: March soybeans reached $15.71 3/4 overnight but traded within yesterday’s range. Upside momentum has stalled since March posted a contract high at $16.33 on Feb. 10. Initial support is seen at yesterday’s low at $15.42 1/4, with key support in the $15.25 to $15.30 area, which would mark at 38.2% retracement of the recent rally.

WHEAT: March SRW and HRW futures traded in narrow ranges overnight and are hovering around the middle of this year’s range. Signs of easing tensions in the Russia/Ukraine standoff pressured wheat futures yesterday and may limit upside today, though corn and soybeans, along with outside markets, may provide support.

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-firm

CATTLE: Live cattle futures may extend yesterday’s gains on expectations for continued cash market strength. Cash sources indicate feedlots are asking $142 to $143 for this week’s showlist supplies in the Southern Plains, while the northern market was quiet Tuesday. Packers have not yet established initial bids, suggesting cash trade will be pushed until the latter part of the week, though cash sources expect steady to slightly firmer prices. Futures’ upside may be limited by a three-week slump in wholesale beef as meatpackers continue to cut prices to move product. Choice cutout values fell $3.59 yesterday to an average of $270.37, the lowest since Jan. 6, though movement was stronger at 165 loads.

April live cattle rose 55 cents yesterday to $146.90, while March feeder cattle rose $1.85 to $168.725, the contract’s highest closing price since Jan. 3.

HOGS: Lean hog futures may extend yesterday’s gains behind a tight supply outlook and strong cash fundamentals, though weakness in wholesale pork suggests a short-term top may be forming. Today’s CME lean hog index is up another $1.33 to $91.84, the highest since early October. But pork cutout values fell $1.26 yesterday to $106.72, still near a fourth-month high hit Feb. 11. Movement totaled 325 loads. April lean hog futures rose $1.825 yesterday to $104.15, the contract’s highest closing price since Jan. 9. Key upside targets include the contract high of $107.70 posted Feb. 10. Support is seen at yesterday’s low of $101.00.