Crude oil continues its aggressive liquidation overnight.
Grain futures experienced a higher wheat trade overnight, while corn and soybeans moved lower, following the declining crude oil as further liquidation was prevalent there. China announced a lock-down of 51 million citizens due to a fresh outbreak of Covid in a region, sparking fears of slowing use. It’s also highly anticipated an Iranian nuclear deal (again) is soon, bringing 1 Mil barrels of oil to the market per day. Mostly it’s also risk-off ahead of today’s Federal Reserve meeting where a .25-.75 fed funds rate increase is anticipated. Liquidation rain across the commodity complex overnight.
Today NOPA releases their February soybean crush report. With estimates for 165-167 Mil Bu crush and soyoil stocks tightening to 1,950 Mil lbs. The crush will be down from the January number, as February has 28 days. In addition, strong demand from the US renewable diesel industry is affecting the offtake for soyoil stocks.
Wheat prices had firmed considerably in the night before retreating into the early morning hours, as Kansas wheat crop ratings released yesterday showed only 23% of the crop in the GD/EX category, which is down from 35% last week. Texas wheat ratings were just 6% GD/EX. As we get closer to April and lack of rain in the Western HRW wheat belt, concerns will grow on yield/production not making trend line.
Corn and soybeans are both in liquidation mode following crude oil lower, but their wave structures suggested corn could drift into the lower 705-720 range, with soybeans potentially testing 16.00. Wheat could also potentially get again caught in some further selling, but end users are waiting in the wings to buy any break that presents itself ahead of the upcoming March stocks and acreage report at the end of the month.
Cattle futures had a strong session yesterday to start the week, with the firm outlook also anticipated for today. The break in corn prices allowed feeder cattle to jump as much as $2-4 higher. Cash markets were untraded for the start of the week with a firming trend in beef prices, and ideas the beef market is nearing a seasonal low is supportive for this week’s trade. Yesterday’s choice-value gained $0.80, and select rose $0.83. A seasonal low in the box beef market is likely forming in a typical rally could carry the choice cutout to near $340 into the second quarter.