Morning market review for January 28, 2022

Grain prices are testing moderate gains ahead of Friday’s session

Overnight Trends:

  • Corn: up to 2 to 3 cents
  • Soybeans: Up to 11 to 13 cents
  • Wheat: up to 5 to 8 cents

*Prices as of 6:50 a.m. CST.

Soybean prices have been a bit hot lately, and action from the night before Friday’s session suggests that this trend will continue today after testing double-digit gains. Corn prices also trended up 0.5%, and low-cost buyers look set to enter the fray for wheat prices that were significantly reduced earlier this week.

Overseas equity markets were mixed but mostly down. Japan’s Nikkei was a bright spot after rising more than 2%, while other Asian markets closed with 1% losses. European markets fell 1.25% to 2% by midday. On Wall St., Dow Jones futures fell 200 points to 33,843 as investors push towards the end of a volatile week.

Energy futures returned to an uptrend as crude oil rose more than 0.5% overnight to return above $87 a barrel. Gasoline and diesel each followed about 1% higher. The US dollar strengthened moderately.

The last NOAA 72 hour rainfall map almost no rain or snow forecast for the Midwest and Plains between today and Monday, although the Great Lakes region is most likely to pick up additional moisture during this time. Official 6 to 10 days forecast cooler than normal weather descending across the central United States between February 2 and 6, with drier than normal conditions returning to the central plains within a week.

Commodity funds were net buyers of soybean (+4,000), soybean meal (+2,000) and soybean oil (+2,000) contracts on Thursday but were net sellers of corn (-4,500). ) and CBOT wheat (-10,000).

But

Corn prices rose moderately overnight after some technical buying partly boosted by the strength of spillovers from other commodities. Prices remain lower but close to multi-month highs at the moment, as traders continue to assess South American production estimates and a more bullish export pace last week.

On Thursday, base corn offers were flat to slightly mixed, rising up to 2 cents higher at an Illinois river terminal and up to 3 cents lower at an Iowa ethanol plant.

Yesterday, the USDA reported corn exports reaching 48.7 million bushels for the week ending Jan. 20. This was at the upper end of trade estimates, which ranged between 23.6 million and 55.1 million bushels. The running totals for the 2021/22 marketing year are still slightly behind last year, at 724.3 million bushels. Export corn shipments reached a new high for the marketing year of 56.6 million bushels.

Corn prices sit comfortably above the $6-a-bushel benchmark, raising the question: Could $7 corn be in play later this year? “The March corn trade between the $6 and $6.40 price levels is currently very fair at this time,” notes Naomi Blohm, senior market advisor at Stewart Peterson. Blohm argues that there are four triggers that will need to be triggered for prices to rise significantly, including a weaker U.S. dollar, poor harvest conditions in South America, acreage swapping in the U.S. and strong exports. Click here for additional analysis.

Are you worried about the “survival rates” of farm families? The fear of failure is real, and for valid reasons. But Davon Cook, family business consultant at K Coe Isom, goes beyond the statistics to draw some important conclusions in the latest Family Farm Success blog – click here to read more.

The preliminary CBOT report showed daily forward volume falling to 287,233, with open interest rising by 3,335. Options volume fell to 52,994 and very narrowly favors puts (26,567) over calls (26,427). Implied volatility for near-the-money contracts in March fell to 22.9% and expires in another 21 days.

Soy

Soybean prices do not appear to be losing any positive momentum after testing double-digit gains overnight and continuing their trend to the highest levels since last summer. Doubts over South American production potential have been a big driving force in recent sessions, and optimism over US exports has provided additional support. Prices for soybean meal and soybean oil also rose about 1% last night.

Yesterday, commodity soybean offers were flat to mixed after falling 5 cents at a Nebraska processor while firming 2 to 4 cents higher at three other Midwest sites.

On Thursday, the USDA reported that sales of old and new crop soybeans totaled 45.2 million bushels last week. That’s near the middle of trade estimates, which ranged between 27.6 million and 69.8 million bushels. The running totals for the 2021/22 marketing year are still slightly behind last year’s pace, at 1.287 billion bushels. Soybean export shipments were just 1% above the previous four-week average, at 58.6 million bushels.

Brazil’s Abiove is the latest group to forecast 2021/22 soybean production potential has fallen below 5 billion bushels. Abiove’s latest production estimate fell 154 million bushels to 4.990 billion bushels. Export estimates also trended lower to 3.193 billion bushels, while crush estimates could reach a new record high of 1.764 billion bushels.

If you would like to register acres for the conservation reserve program, the registration window for the general CRP is January 31 through March 11, and registration for the prairie CRP is April 4 through May 13. Last year, we rolled out a better, bolder program, and we strongly encourage you to consider its higher payment rates and other incentives,” said Zach Ducheneaux, Administrator of the USDA Farm Service Agency. Click here to find out more.

South Korean importers bought around 60,000 tonnes of soybean meal, likely from South America, under a private deal struck earlier in the day. The grain should arrive in mid-May.

The preliminary CBOT report showed daily forward volume rise to 285,710 and open interest jumps 11,446 higher. Options volume fell to 89,429 and favors calls (60,496) more than puts (28,933). Implied volatility for near-the-money contracts in March rose 20.9% and expires in 21 days.

Wheat

Wheat prices are finally attracting some cut-price buyers after seeing significant declines earlier this week. Prices could remain volatile going forward as traders weigh various factors, including the strengthening US Dollar, ongoing tensions between Ukraine and Russia, overseas buying trends, and more.

The latest updates from the US Drought Monitor, released yesterday and covering the week to January 25, indicate that 70.9% of the country is experiencing some level of drought. The Hautes Plaines region is particularly affected, with 90.3% of the region covered by drought, compared to 88.3% the previous week.

Exports of old and new crop wheat reached 27.1 million bushels last week, according to the latest USDA data released Thursday. This exceeded the full range of trade estimates, which were between 7.3 million and 22.0 million bushels. Year to date totals for the current marketing year now stand at 443.1 million bushels. Wheat export shipments rose 21% from the previous four-week average to 13.3 million bushels.

The USDA-FAS predicts a record wheat crop in Argentina for the 2021/22 season, reaching around 801 million bushels. Argentine wheat exports are projected at 558.5 million bushels.

The preliminary CBOT report showed SRW daily volume falling to 92,788, with open interest down 687. Options volume also fell to 35,920 and still moderately favors calls (19,649) over put options (16,271). Implied volatility for options close to the March currency fell to 31.5%, expiring in 21 days.

HRW wheat volume fell to 40,782, with open interest trending higher by 3,328. Options volume fell to 3,328 and now favors puts (2,067) over calls (1,324 ).

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