Ahead of the Open | December 15, 2021
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 2 to 4 cents higher.
Wheat: 3 to 10 cents lower.
GENERAL COMMENTS: Winter wheat futures fell to lows for the week overnight while corn erased initial weakness and turned higher at the end of the session. Soybean futures rose with support from soymeal’s climb to 5 1/2-month highs. Malaysian palm oil firmed slightly while Nymex crude oil gained about 1.0%. The U.S. dollar index is around 100 points lower this morning.
The Fed is expected to announce an accelerated pace for tapering monthly asset purchases after the conclusion of the central bank’s policy-setting meeting today. Inflation that’s surged to the highest annual rates in nearly four decades has also heightened expectations the Fed will hike short-term interest rates sooner than previously thought.
The National Oilseed Processors Association (NOPA) is expected to report 181.6 million bu. of soybeans were crushed in November, according to a Reuters survey. If realized, that would be a record for the month and the fifth largest monthly crush total ever. Soyoil stocks at the end of November are expected to come in at 1.903 billion lbs., which would be the fifth consecutive monthly increase and the largest level since April 2020.
Russia is considering reducing its looming wheat export quota slightly from a previously planned 9 MMT, sources familiar with discussions told Reuters, with one source indicating it could be 8 MMT. Russia has said that it would set grain and wheat export quotas for Feb. 15 to June 30 to secure domestic supply in the face of high food inflation.
Iowa farmland soared 29% in 2021 to an average per-acre value of $9,751, according to Iowa State University’s (ISU) annual survey. The nominal value of an acre of farmland is now higher than at any point since ISU began surveying land prices in 1941 and 12% higher than the previous peak in 2013. In inflation-adjusted terms, current values are still lower than 2012 and 2013.
Algeria purchased around 690,000 MT of optional origin milling wheat, likely to be sourced from Germany, the Baltic Sea region, the Black Sea region and Argentina. Japan received no offers in its tender to buy 80,000 MT of feed wheat and 100,000 MT of feed barley.
CORN: March corn futures rose 5 1/4 cents yesterday to $5.90 1/4, scoring a bullish “outside day” higher on the daily bar chart. Futures firmed late in the overnight session but didn’t take out Tuesday’s high. Bulls have a near-term technical advantage, with prices in a two-month uptrend. The next upside price objective for bulls is to close March futures above solid resistance at the November high of $5.96 3/4.
SOYBEANS: January soybeans traded within yesterday’s range overnight after jumping 15 1/2 cents yesterday to $12.59 1/2. January soymeal overnight hit $381.90, the contract’s highest intraday price since July 2. The next near-term upside objective for soybean market bulls is closing January above solid resistance at the November high of $12.89 1/4.
WHEAT: March SRW futures fell as low as $7.71 1/2 overnight after falling slightly yesterday. Market bulls still hold a near-term technical advantage, though the short-term uptrend on the daily bar chart was negated recently. Upside objectives include closing March futures above solid resistance at $8.25. Bears’ next downside objective is closing March below solid support at $7.25.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-mixed
CATTLE: Live cattle futures fell slightly yesterday and may remain under pressure from a slumping wholesale beef market and expectations for softer cash prices the rest of the year. Cash cattle trade started around $138 in Kansas yesterday, down around $2 from last week. Most feedlots passed on the lower prices since it was early in the week, but it seems likely cash trade will be lower than last week’s $139.69 average price. Packers have shortened holiday schedules the last two weeks of this month and are unlikely to bid aggressively. Choice cutout values fell another $2.50 yesterday to $260.72, the lowest daily average since April 5. February live cattle futures fell 55 cents to $138.30.
China's customs administration said it will allow imports of some beef products from Brazil to resume, lifting a ban imposed early in September due to two atypical cases of bovine spongiform encephalopathy in Brazil. Beijing has resumed imports of Brazilian boneless beef products from cattle under 30 months old.
HOGS: Lean hog futures fell yesterday but should find support from signs of a seasonal bottom in the cash market. The CME lean hog index is down 8 cents to $72.10 today but has risen over seven of the past 10 trading sessions and is still near a three-week high. February lean hog futures fell 67.5 cents yesterday to $80.075, a nearly $8.00 premium to today’s index. Pork cutout values fell $1.55 yesterday to an average of $85.48.
China will raise import tariffs on most pork products next year, the country’s finance ministry said, amid the sharp increase in domestic production. Tariffs for most favored nations, including the U.S., will return to 12% on Jan. 1, from 8% currently, according to a ministry statement. China lowered its tariffs on frozen pork in 2020 from 12% to 8% as the country faced soaring domestic meat prices.
