Ahead of the Open | December 16, 2021
GRAIN CALLS
Corn: Steady to 1 cent higher.
Soybeans: 8 to 11 cents higher.
Wheat: 1 to 5 cents lower.
GENERAL COMMENTS: Winter wheat futures extended yesterday’s declines overnight, while soybean futures climbed to highs for the week and corn also firmed. Malaysian palm oil firmed slightly and Nymex crude oil rose mildly. The U.S. dollar index is down more than 600 points this morning.
Brazil is expected to harvest a record 144.1 MMT soybean crop, according to a Reuters poll of analysts, representing a 5% increase from 2020-21. The poll showed Brazilian farmers planted a record 40.35 million hectares to soybeans, up 3.7% from last year, as Brazilian farmers took advantage of early rains.
AgRural cut its Brazilian soybean crop forecast to 144.7 MMT from 145.4 MMT previously due to drought impacts in Parana. The consultancy cut Brazil's corn crop to 114.4 MMT, 1.1 MMT less than its previous forecast, citing dryness in Brazil's southernmost state of Rio Grande do Sul.
Dry and unseasonably warm weather is threatening yield prospects for winter wheat in the U.S. Plains as global supplies of milling wheat are tightening. Winter wheat has struggled in some areas, including parts of Oklahoma where small plants lack robust root systems. “The plant is just not in good shape to handle adverse conditions,” said Mark Hodges of Plains Grains, a wheat industry group.
Strategie Grains raised its estimate for EU soft wheat exports outside the bloc for 2021-22 by 1.1 MMT as a fall in prices has made French wheat more competitive on world market. The firm pegged 2021-22 soft wheat exports outside the 27-country EU at 31.5 MMT.
Argentina will cut export taxes on soybeans, corn and wheat, but only if they are organic crops, which currently make up a small fraction of the major grains producer's harvest. The country’s government said many organic and ecological products would see export tariffs eliminated.
Japan purchased 228,783 MT of wheat from its weekly tender, including 129,201 MT from the U.S. and 99,582 MT from Canada. Iran purchased around 500,000 MT of milling wheat, likely sourced from Russia, Germany and/or the Baltic Sea region. The Philippines bought around 110,000 MT of feed wheat to be source from Australia, Europe or the Black Sea region.
CORN: USDA reported net U.S. sales of 1.949 MMT for the week ended Dec. 9, a marketing-year high. Sales were up 72% from the previous week and 74% from the average for the previous four weeks. Sales were on the high end of trade expectations ranging from 1.2 MMT to 2.0 MMT.
SOYBEANS: Net weekly U.S. soybean sales totaled 1.309 MMT, down 20% from the previous week and down 6% from four-week average. Prominent buyers included China, at 985,800 MT, including 402,000 MT switched from unknown destinations and decreases of 6,000 MT. Expectations ranged from 1.1 MMT to 1.775 MMT. USDA announced daily soyoil sales of 20,000 MT to India for 2021-22.
WHEAT: Net U.S. wheat sales totaled 650,600 MT for the week ended Dec. 9, a marketing-year high. Sales rose “noticeably” from the previous week and from the four-week average. Sales surpassed trade expectations ranging from 200,000 to 400,000 MT.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-mixed
CATTLE: Live cattle futures may face followthrough pressure from yesterday’s sharp declines and signs of a top in cash prices. Cash cattle this week have traded around $2 lower than last week, though feedlot sales were limited. Choice cutout values extended a recent slide, falling 46 cents yesterday to $260.26, the lowest daily average since April 5. At least three major beef plants in the Southern Plains closed their second shifts yesterday due to high winds. If there’s no damage, they will likely resume normal operations today. This week was expected to be the last with a full slaughter schedule this year, due to holiday schedules the next two weeks. But now this week’s slaughter won’t reach expectations. Net weekly U.S. beef export sales of 17,100 MT were up “noticeably” from the previous week, but down 3.0% from the prior four-week average, USDA reported.
HOGS: Lean hogs fell the previous three days but may find support from what appears to be a bottom in the cash market. The CME lean hog index is up 20 cents today, its eighth gain in the last 11 market days, indicating a seasonal low has been posted. February lean hog futures ended Wednesday $7.025 above today’s index quote, slightly greater than the five-year average increase for the index of roughly $5 from mid-December to mid-February, when the contract will expire. Pork cutout values rose $2.35 yesterday to an average of $87.83, near a two-week high and led by a gain of over $12.00 in bellies. Net weekly U.S. pork sales totaled 31,100 MT, up 58% from the previous week and up 20% from the prior four-week average.
