Market Snapshot | February 24, 2023

Livestock producers: Extend corn-for-feed coverage… Corn futures dropped to a level we consider a value buy under current market conditions. We advise livestock producers to cover all corn-for-feed needs in the cash market through the end of March. Be prepared to extend coverage on additional price pressure. 

Corn futures are posting 6- to 8-cent losses at midmorning. 

• Corn futures are extending the previous session’s losses, as the U.S. dollar climbs higher.
• USDA Secretary Tom Vilsack said a dispute settlement request under the U.S.-Mexico-Canada Agreement (USMCA) is likely “coming” relative to Mexico’s decree barring imports of CMO corn for food use as of 2024.
• USDA reported corn export sales of 823,200 MT for week ended Feb. 16, which were 20% below the previous week and 30% below the 4-week average. Sales were near the middle of the expected pre-report range of 500,000 MT to 1.3 MMT.
• March corn has dropped as low as $6.51 1/2 to the lowest level since Jan. 12. Support lies at $6.47 1/4, while resistance stands around the 40- and 100-day moving averages at $6.73.

Soybeans are 2 to 8 cents lower, with new-crop marking the heaviest losses. March meal futures are around $5.00 higher. March soyoil is about 75 points lower.

• Soybeans are lower for the third straight session rains are expected over most of Argentina in the next two weeks, and export sales wane.
• World Weather Inc. notes central and southern Argentina will have a chance for rain during the second half of next week. While drought-busting moisture isn’t expected, they will provide temporary relief. Northern Argentina has greater rainfall chances over the next two weeks.
• USDA reported net soybean export sales of 544,900 MT for week ended Feb. 16, which was a 20% increase from the previous week, but is down 18% from the 4-week average. Sales were in the middle of the expected range from 300,000 to 850,000 MT.
• March soybeans have fallen as low as $15.26, filling the gap that started the week. Initial support lies at $15.25 3/4, while initial resistance is at $15.49 3/4.

Winter wheat futures are mostly 20-plus cents lower, while spring wheat is mostly 15 to 17 cents lower.

• SRW wheat futures are being pressured by U.S. dollar strength. The U.S. dollar index has rebounded to levels not seen since early January.
• Western U.S. hard red winter wheat areas are not likely to get much moisture in the next 10 days to two weeks, according to World Weather Inc.
• USDA reported net wheat export sales of 338,800 MT for week ended Feb. 16, which was a 62% jump from the previous week and up 39% from the 4-week average. Sales were in the middle of the expected pre-report range between 150,000 and 500,000 MT.
• March SRW wheat futures dipped as low as $7.12 1/2, matching the Jan. 23 low. Further support is at $7.00. Initial resistance stands near $7.28.

Live and feeder cattle are lower at midmorning.

• Live cattle are lower as traders position ahead of this afternoon’s Cattle on Feed Report and wait for further cash cattle trade to develop.
• Light to moderate cash cattle trade was reported at $1 higher prices in the northern market and roughly $2 higher in the Southern Plains on Thursday, though some feedlots held out hopes for higher prices.
• USDA’s Cattle of Feed Report is expected to show a 3.5% decline in feedlot numbers compared with year-ago, which would be the fifth straight month with a year-over-year reduction. January placements are expected to have declined 2.9%, along with a 3.9% increase in marketings from last year.
• USDA will also release its Cold Storage Report this afternoon. The five-year average is a 7.7-million lb. increase in beef stocks during January.
• Net weekly beef sales totaled 15,400 MT for 2023, which was down 45% from the previous week and 35% below the 4-week average. China was the top purchaser at 4,300 MT.
• Choice boxed beef prices were unchanged at $287.91 on Thursday, though Select notched $2.23 higher to $275.87, dropping the Choice/Select spread to $12.04.
• April live cattle pushed to new highs before turning lower. The contact high at $166.40 is initial resistance. Initial support lies around $164.72. 

Hog futures are mostly lower, with mild weakness in deferred contracts.

• April lean hog futures are choppy as traders anticipate further movement in the cash index.
• The CME lean hog index rose another 65 cents as of Feb. 22. Yesterday’s drop in April lean hog futures combined with gains in the cash index over the past month have narrowed the lead hog futures contract’s premium to around $8.00.
• This afternoon’s Cold Storage Report is expected to show a sizable increase in pork stocks during January. The five-year average is a 54.6-million-lb. increase during the month.
• Net pork export sales totaled 51,900 MT in week ended Feb. 16, which was up $16% from the previous week and 39% above the 4-week average. Top buyers were Mexico (25,000 MT) and China (12,100 MT).
• April lean hogs gapped higher but filled the gap.