GRAIN CALLS
Corn: 1 cent higher to 2 cents lower.
Soybeans: 10 to 17 cents higher.
Wheat: HRW and SRW steady to 4 cents higher; spring wheat 1 to 3 cents lower.
GENERAL COMMENTS: Soybean futures extended a rally to nine-month highs overnight amid ongoing expectations South America’s drought-driven crop shortfall will drive more export business to the U.S. Winter wheat faced some profit-taking but ended the overnight session slightly higher on Russia/Ukraine tensions, while corn was down slightly. Malaysian palm oil futures rallied to a record high on supply concerns, while Nymex crude oil futures have mildly firmed after mildly pulling back overnight. U.S. stock index futures are moderately firmer and the U.S. dollar index is lower this morning.
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.
The U.S. and Europe placed economic sanctions on Russia for what President Joe Biden denounced as the beginning of an “invasion of Ukraine,” unveiling a set of coordinated punishments. Japan, Taiwan and Singapore issued a joint statement saying they would limit technology exports to Russia to pressure Russian President Vladimir Putin with damaging restrictions on his ambitions to compete in high-tech industries. In a video statement, Putin reacted to Tuesday’s developments, saying Russia is open to “direct and honest dialogue” and “diplomatic solutions.”
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%. The “good” to “excellent” ratings improved to 10% in Texas (up three points), 21% in Montana (up seven points) and 21% in Colorado (up one point). 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.
USDA’s monthly Cold Storage Report yesterday showed a smaller-than-normal build in frozen pork stocks during January. Frozen pork inventories at 428.5 million lbs. rose 32.0 million lbs. (8.1%) from December, far less than the five-year average gain 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%) less than the five-year average. Beef stocks totaled 526.4 million lbs., up 19.3 million lbs. (3.8%) versus December, whereas the five-year average was a 2-million-lb. decline during the month. Beef stocks were 7.1 million lbs. (1.4%) above January 2021 inventories but 14.9 million lbs. (2.9%) under the five-year average.
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.
CORN: May corn futures overnight traded in a narrow range overnight while facing mild profit-taking pressure following yesterday’s rally to seven-month highs. Yesterday’s high at $6.74 1/2 marks initial resistance, with support at the 10-day moving average of $6.53.
SOYBEANS: May soybeans overnight reached $16.53 1/2, a contract high for the second straight day. November soybeans posted a contract high at $14.85.
WHEAT: May SRW wheat overnight reached $8.58 1/4, the contract’s highest price since $8.61 1/4 on Nov. 29. The wheat market’s breakout above the trading range of the past two months should embolden market bulls, who may be aiming for the May contract high at $8.79, posted Nov. 24.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firm
CATTLE: Live cattle futures may gain support from expectations for stronger packer competition for cash cattle this week, which could push live steer prices higher for the fourth week in a row. But with USDA’s Cattle on Feed Report scheduled for Friday afternoon, cash negotiations could be extended deep into the week unless packers are aggressive with bids ahead of that data. Gains may be limited by slumping wholesale beef, as Choice beef cutout values fell $2.07 yesterday to $262.02, a two-month low. April live cattle gained 15 cents yesterday to $146.025. March feeder futures tumbled $1.20 to $164.225.
HOGS: Lean hog futures may extend the sharp recent rally on strong technicals, firm cash fundamentals and speculative money flow into the long side of the market. Futures are overbought and due for a corrective pullback, but a major market peak isn’t likely until attitudes shift. The CME lean hog index is up another $1.04. Pork cutout values fell $1.33 yesterday to an average of $108.76, led by a decline of over $6 in bellies. Movement totaled about 314 loads. The pork cutout value remains up sharply from January lows, a reflection of improving demand and tighter supplies of market-ready hogs.
April lean hog futures soared $2.675 yesterday to $112.075, the highest closing price for a nearby contract since mid-July.