Market Snapshot | February 23, 2022

Nearby corn futures are mixed at midmorning after erasing overnight losses.

• Corn futures rebounded from overnight weakness as soybean and wheat markets rallied amid ongoing concerns a Russia/Ukraine conflict will disrupt the global grain trade.
• May corn futures traded in a narrow range while under mild profit-taking pressure before pushing to a fresh contract high at $6.75.
• A strong close would have bulls targeting the psychologically important $7.00 level. Support is seen at the 10-day moving average of $6.52 1/4.
• December corn hit a contract high at $6.08 3/4.

Soy complex futures are broadly higher, with nearby soybeans up 20-plus cents, nearby soymeal up nearly $10 and nearby soyoil up more than 50 points.

• Nearby soybean futures rose near nine-month highs on fresh export business and expectations for crop shortfalls in South America.
• Soyoil futures are supported by concerns about reduced global edible oils exports as Ukraine and Russia account for nearly 80% of global supplies.
• USDA reported a daily sale of 132,000 MT of soybeans for delivery to China during the 2022-23 marketing year, the latest in a four-week string of purchases. Since Jan. 28, USDA has reported a combined 3.78 MMT of soybean sales to China or unknown destinations.
• China will plant soybeans everywhere possible this year, the country’s ag minister said, as it seeks to reduce its dependence on imports. "We will make great efforts... to expand the production of soybeans and oilseeds, Ag Minister Tang Renjian, said. “Each extra mu planted counts, and every jin harvested counts,” he noted, using Chinese measures for land area and weight.
• May soybeans reached $16.64, a contract high for the second straight day. November soybeans posted a contract high at $14.85.

Wheat futures are sharply higher, led by gains of 18 to 20 cents in HRW and SRW contracts.

• Nearby winter wheat futures climbed to the highest levels in over nine years in the wake of escalating tension between Russia and Ukraine. Both countries are major wheat exporters.
• The U.S. HRW wheat crop deteriorated further during February, based on individual state crop condition ratings. The “good” to “excellent” ratings for HRW wheat dropped to 26% for Kansas (down four points from the end of January), 9% for Oklahoma (down seven points) and 24% for South Dakota (down seven points). Nebraska’s “good” to “excellent” rating was unchanged at 36%. When the individual state 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 plunged to a rating of 259.0, down 11.4 points from the end of January and 65.4 points below the end of November. At the current level, the CCI rating would be 71.3 points below the five-year average for the beginning of April when USDA starts releasing weekly national crop condition ratings.
• Winter wheat technicals have grown increasingly bullish after both HRW and SRW markets broke above the trading ranges that held much of the past two months, with nearby contracts reaching the highest levels since December 2012.
• May SRW wheat reached $8.74 3/4, the contract’s highest price since the contract high of $8.79 on Nov. 24. May HRW futures notched a contract high at $9.07 1/4. May spring wheat hit a two-month high.

Cattle futures are lower at midmorning, led by declines in feeder cattle.

• Live cattle futures are lower in a continuation of a two-week slide driven by slumping wholesale beef and beliefs the market has established a near-term top, despite recent cash trade firmness.
• Cash sources expect stronger packer competition for cattle this week, but with USDA’s Cattle on Feed Report scheduled Friday afternoon, cash negotiations could be extended deep into the week unless packers are aggressive with bids ahead of the numbers.
• Boxed beef prices remain under pressure as packers cut prices to stir retail interest. Choice beef cutout values fell $2.07 yesterday to $262.02, a two-month low.
• The USDA-reported live steer average rose $1.88 last week to an average of $142.36, the third consecutive weekly gain.
• USDA’s monthly Cold Storage Report yesterday showed U.S. beef stocks as of Jan. 31 totaled 526.4 million lbs., up 19.3 million lbs. (3.8%) from the end of December and contrary to an average decline of 2 million lbs. the previous five years. Jan. 31 beef stocks were 7.1 million lbs. (1.4%) above year-earlier inventories but 14.9 million lbs. (2.9%) under the five-year average.
• April live cattle are trading within yesterday’s range, with yesterday’s low of $145.40 seen as initial support. The 10-day moving average around $146.55 marks initial resistance.

Lean hog futures are sharply lower in most contracts, led by the nearby April contract.

• Hog futures fell for the first day in seven behind profit-taking and corrective pressure following the sharp rally over the past week. Futures are overbought and due for a setback, but strong cash fundamentals are limiting weakness.
• The CME lean hog index rose to $98.16, the highest since Sept. 7, and is up over $26 this year.
• Pork cutout values fell $1.33 yesterday to an average of $108.76, still up sharply from January lows in a reflection of improving demand and tighter supplies of market-ready hogs.
• USDA reported a smaller-than-normal build in frozen pork stocks during January. Frozen pork inventories as of Jan. 31 totaled 428.5 million lbs., up 32.0 million lbs. (8.1%) from December and less than the five-year average increase of 56.7 million lbs. during January. Pork stocks were 29.0 million lbs. (6.3%) under year-ago and 121.7 million lbs. (22.1%) under the five-year average.
• April lean hogs rose briefly at today’s open to touch $112.85, a contract high for the fourth session in a row before fading. The contract is working on a key reversal. Initial support is seen at yesterday’s low of $108.925.