Market Snapshot | February 1, 2022

Old-crop corn futures are 10 to 12 cents higher at midmorning.

• Corn futures bounced back from yesterday’s selloff with help from strength in soybeans and wheat. Drought-reduced crop prospects in South America also continue to support prices.
• Crop Consultant Dr. Michael Cordonnier kept his corn production estimates for Argentina and Brazil unchanged at 51 MMT and 112 MMT, respectively. He holds a neutral to lower bias for both countries.
• “Brazil’s 2021-22 total corn production is now going to depend on the safrinha (second) crop,” Cordonnier said in a weekly report. “The first corn crop was severely impacted by the drought in southern Brazil and there is now a strong financial incentive to plant as much safrinha corn as possible.”
• USDA is expected to report corn-for-ethanol use totaled 478.6 million bu. in December, up 9.9 million bu. from November and 46.9 million bu. higher than December 2020, based on a Bloomberg survey of analysts. USDA will release its monthly Grain Crushings Report at 2 p.m. CT.
• USDA reported daily corn sales of 110,000 MT to Mexico for 2021-22.
• March corn is trading within yesterday’s range but has climbed near the contract high of $6.42 1/2 reached yesterday before prices fell.

Soy complex futures are broadly higher and led by gains of more than 35 cents in nearby soybeans and over $14 in nearby soymeal; soyoil is up more than 100 points.

• Soybean futures soared to contract highs for the fourth straight session on fresh export business and expectations a smaller South American crop will boost demand for U.S. beans.
• Cordonnier lowered his Brazil soybean crop projection 4 MMT to 130 MMT. He also lowered his forecast for Argentina’s soybean crop by 1 MMT to 42 MMT, citing the impacts of drought.
• In Brazil, “there was some hope that the soybeans in Rio Grande do Sul could recoup some of the losses if the weather improved, but those hopes largely faded under the extreme temperatures,” Cordonnier said in a weekly report. “Two to three weeks of record or near-record high temperatures have resulted in stunted soybeans, low plant populations, and in some cases dead plants.”
• USDA reported daily soybean sales of 132,000 MT to China for 2022-23. Today’s announcement follows USDA-reported soybean sales to China the previous two business days totaling 393,000 MT for 2021-22 and 2022-23.
• USDA is expected to report soybean crush at a record 197.5 million bu. in December, based on a Bloomberg survey. The projected crush would be up 7 million bu. from November and 4.4 million bu. more than last year. Soyoil stocks are expected to climb to 2.51 billion pounds.
• March soybeans extended overnight gains to hit at contract high at $15.30 1/2, the highest for nearby futures since June of last year. March soymeal touched a contract high at $435.30.

Wheat futures are broadly higher, led by gains of 11 to 12 cents in nearby SRW contracts and 12 to 15 cents in spring wheat.

• Wheat futures are up in a corrective bounce from yesterday’s slump and ongoing concerns a Russian invasion of Ukraine may disrupt the global wheat trade. Today’s bullish ag market backdrop overshadowed prospects for moisture relief in the U.S. Plains.
• Beneficial snow is expected to reach the driest areas of the U.S. HRW belt today through Thursday, World Weather Inc. said. “Enough snow will fall for some rise in topsoil moisture when it melts; though, more precipitation will be needed in order to have a notable impact on drought status.”
• Strategie Grains said it expects world production of wheat, corn and barley to rise in 2022-23 versus 2021-22. Wheat output is projected to rise to around 3.0% to 762 MMT and corn production is expected to increase 1.0% to 1.167 billion MT, the consultant said today.
• Japan is seeking 53,957 MT of Canadian and Australian wheat in its weekly tender. Tunisia tendered to buy 100,000 MT of wheat, 75,000 MT of durum and 75,000 MT of feed barley – all optional origin.
• March SRW wheat is trading within Monday’s range after dropping 25 cents yesterday to $7.61 1/4, the contract’s lowest closing price since $7.41 1/2 on Jan. 14.

Live cattle futures are mildly firmer and feeders are slightly lower.

• Live cattle futures faded from early gains to four-week highs spurred by yesterday’s bullish USDA Cattle Inventory Report. Expectations for further weakness in cash cattle are limiting futures’ strength.
• Feeder cattle are under pressure from rallying corn.
• USDA’s Cattle Inventory Report estimated the U.S. herd as of Jan. 1 totaled 91.9 million head, down 2.0% from the same date a year earlier and about 762,000 head below expectations. Other categories in the report were also below expectations, including beef cow inventory, which dropped 719,000 head (2.3%) from last year.
• Live steers last week averaged $136.95, down 55 cents from the previous week and the sixth weekly decline in the past seven weeks.
• April live cattle rose as high as $144.85, the contract’s highest intraday price since $145.30 on Jan. 3. Technicals have turned increasingly bullish with the past week’s rally, which may have bulls targeting the contract high of $145.85, reached Dec. 29.
• March feeder cattle rose to $163.65, the highest since Jan. 21, before fading.

Lean hog futures are sharply higher at midmorning after posting more contract highs.

• April lean hogs posted a contract high at $99.15 and deferred futures such as June also reached contract highs behind strengthening cash fundamentals.
• Today’s CME lean hog index is up $1.54 to $82.15, the highest reading since Oct. 25.
• Futures are also gaining support from signs meatpackers are returning to normal processing levels after Covid-related slowdowns last month. Yesterday’s hog slaughter was an estimated 475,000, up 27,000 from one week ago and down 2,000 from a year ago.
• Pork cutout values fell $1.88 yesterday to an average of $94.51, though movement was decent at 352 loads. April lean hogs yesterday rose 77.5 cents to $95.70.