Ahead of the Open | January 26, 2022

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GRAIN CALLS

Corn: 1 to 3 cents lower.

Soybeans: 4 to 6 cents higher.

Wheat: 14 to 20 cents lower.

GENERAL COMMENTS: Wheat futures fell overnight under corrective, profit-taking pressure after strong gains the previous two days. Soybeans erased earlier weakness and climbed to gains near the end of the overnight session, while corn fell slightly. Malaysian palm oil futures rose for a second straight session on Wednesday, supported by concerns over lower production and stronger rival oils. U.S. stock index futures rose firmly in an extension of yesterday’s sharp bounce-back and the U.S. dollar index rose slightly this morning.

An “impressive snow event” in the west-central Plains yesterday brought accumulations of 10 to 27 inches in a relatively narrow band extending from east-central Colorado into west-central Kansas, World Weather Inc. reported. The snow, when melted, “will lead to a small region of improved topsoil moisture for a portion of hard red winter wheat country,” World Weather said, though area impacted by the greatest precipitation “was extremely small” relative to the entire HRW production belt.

Smaller soybean crops in South America are likely to push major export business to the U.S. from June onwards, Reuters reported, citing Oil World. The oilseed analyst estimates the combined 2021-22 soybean harvest in Brazil, Argentina, Paraguay and Uruguay will fall to about 186.3 MMT, down 7.4 MMT from the last season and a four-year low. Oil World forecasts Brazil’s soybean crop will fall to about 135 MT from 138.5 MT last year and Argentina’s crop at around 42 MMT, down 1.8 MMT.

The Federal Reserve is expected to signal plans to start raising interest rates in March at the conclusion of its two-day monetary policy meeting this afternoon. Fed officials will not provide updated economic and interest rate projections, but Chair Jerome Powell will hold a press conference. His words will be scrutinized for clearer direction on plans to tamp down inflation and reduce the Fed’s massive balance sheet.

South Korea purchased around 262,000 MT of optional origin corn in two separate tenders and 55,000 MT of optional origin feed wheat. The Philippines purchased 35,000 MT of Australian feed wheat and issued another tender to buy an unspecified amount of feed wheat.

 

CORN: March corn extended yesterday’s slide overnight as the market followed wheat prices lower. The lead contract fell 1 cent yesterday to $6.20 after hitting a seven-month high earlier in the day, suggesting the market may be reaching a technical exhaustion point and could consolidate or push even lower in coming days. Initial support is seen at the 10- and 20-day moving averages of $6.07 3/4 and $6.04 1/4, respectively.

SOYBEANS: March soybeans rose as high as $14.15 near the end of overnight trade after dropping as low as $13.93 3/4 earlier. Rain relief in some dry areas of South America slowed upside momentum this week, but export optimism continues underpin prices. Initial support is seen at the 10-day moving average of $13.96 and this week’s low at $13.82 1/2.

WHEAT: March SRW wheat fell as low as $7.96 1/2 overnight after jumping 38 cents the past two days to a four-week high. March HRW wheat fell as low as $8.15 after rising 16 1/2 cents yesterday to $8.34 1/2, the highest close since Dec. 28.

 

LIVESTOCK CALLS

CATTLE: Steady-weak

HOGS: Steady-mixed

CATTLE: Live cattle may continue yesterday’s consolidation trade as the market waits for the cash market to establish direction. Initial cash cattle activity occurred around $137 in the Southern Plains yesterday, roughly steady with last week’s trade, though sales volume was light, with most feedlots seeking higher prices and packers likely reluctant to raise bids. Recovery in U.S. stocks may support livestock, though cattle charts turned bearish with sharp declines early this week. Choice cutout values fell $1.12 yesterday to $292.38 and Select fell $1.47 to $283.32, though movement was strong at 143 loads. April live cattle gained 2.5 cents yesterday to $140.10.

HOGS: April lean hogs yesterday soared to a contract-high close for the fourth consecutive session on stronger cash fundamentals, but the market is overbought technically and due for correction. Front-month futures finished $9.00 above today’s CME lean hog index quote, which is down 24 cents to $78.08. Pork cutout values fell $3.20 yesterday to $92.46, down from a 2 1/2-month high the previous day. Movement totaled 347 loads.

 

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