Soybean prices make new contract highs overnight before retreating.
Grain futures had a mostly lower session overnight, but soybean prices broke to new contract highs in the early morning hours, taking out the March 2022 contract high made early last June at 10.45. World Palm oil prices moved to new record highs as the Indonesian government demanded that a greater share of their Palm oil production be sold into the domestic market at discounted prices. In doing so, the Indonesian government limited palm oil exports. This pushed March Palm oil to a new historic high of 5,662 ringgits/MT. Soybean oil raced higher in the early morning hours to near 65.00 before succumbing to chart-based selling and continual liquidation in wheat.
Wheat prices continue to soften as Russian/NATO members are at a political stalemate. The Kremlin is rejecting US and NATO offers for resolution. As a result, potential sanctions may be applied to continue negotiations on NATO and Ukraine's future.
Chinese corn prices are just below historic highs with values at $11.16/Bu as they go into their lunar new year holiday, which starts Monday. Demand for domestic is active. A sharp rally in Brazilian FOB soybean and corn premiums is forcing importers to the US. This morning's export sales data showed exports of soybeans and corn both well over 1 MMT's.
In the stock index futures overnight, volatility had seen the stock market decline in the night session but recover in the early morning hours on bottom picketing. At the conclusion yesterday, the Central US Bank meeting said it is indicating it will start raising interest rates in March and have the Quantitative Easing buying wrapped up.
South American forecast maintains below normal rainfall across southern Brazil and Argentina over the next two weeks, with near to above normal rains continuing to slow soybean harvest in northern Brazil. This is the continued weather pattern of December, hurting overall South American yields. If dryness persists in Paraguay, southern Brazil, and Argentina through February, further significant reductions in production will be hitting the balance sheets.
Cattle futures recovered yesterday, closing higher across the board. Cattle slaughter through midweek totaled 351,000 head, up 6000 had from last week and 2000 under a year ago. The larger kills are weighing on the box beef trade, which was again lower on Wednesday. The choice value was down $2.92 to $289.46, and the select value was down $3.60 at $279.72. The choice/select spread remains above average at $9.74 choice premium. April cattle futures held key support at 140.00 on Tuesday and Wednesday and helped prompt a short-covering rally. Wednesday's close was just shy of the 50-day MA, at 142.00. If that technical resistance is overcome, the next target is 144.00.