Ahead of the Open | December 21, 2021

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GRAIN CALLS

Corn: Steady to 1 cent higher.

Soybeans: 1 cent lower to 1 cent lower.

Wheat: 2 cents lower to 4 cents higher.

GENERAL COMMENTS: Grain and soybean futures were narrowly mixed overnight. Malaysian palm oil rose slightly, while Nymex crude oil is up around $1.00 as the market recovers from yesterday’s tumble. The U.S. dollar index is slightly weaker this morning.

Crop Consultant Dr. Michael Cordonnier cut most of his South American crop forecasts, citing expanding dryness as a building concern across southern Brazil, northern and eastern Argentina and Paraguay. Cordonnier lowered his Brazil production estimates by 2 MMT for soybeans to 142 MMT and by 1 MMT for corn to 115 MMT. For Argentina, Cordonnier cut his soybean crop forecast by 1 MMT to 49 MMT but maintained his corn crop estimate at 53 MMT. He also cut his Paraguay soybean crop peg by 1 MMT to 8.5 MMT. Cordonnier maintains a lower bias toward crops in all three countries.

China's November soybean imports from the U.S. surged from October, as the effects of the export disruptions from Hurricane Ida earlier this year started to clear. China imported 3.63 MMT of U.S. soybeans in November, up from only 775,300 MT in October, Reuters reported, citing data from the General Administration of Customs. Overall, China brought in 8.57 MMT of soybeans in November, up sharply from October.

Turkey purchased 320,000 MT of milling wheat from unspecified origins.

 

CORN: March corn futures traded within yesterday’s range overnight. Market bulls have a near-term technical advantage with prices in a nine-week uptrend on the daily bar chart. The next upside objective for bulls is to close March futures above solid resistance at $6.00. The next downside target for bears is closing March below support at $5.62 1/2.

SOYBEANS: March soybeans reached $12.98 overnight, matching yesterday’s high and 1/4 cent below last week’s high. The most-active contract yesterday closed at the highest level since Sept. 29. Market bulls have a slight near-term technical advantage with prices in a six-week uptrend on the daily bar chart. Upside objectives for bulls include pushing above resistance around $13.00 and closing March futures above solid resistance at $13.25.

WHEAT: March SRW wheat rose as high as $7.82 3/4 overnight, extending yesterday’s rebound, but remain in a three-week downtrend, indicating a top has been established with the contract highs in late November. Downside objectives for market bears include closing March futures below solid technical support at $7.25.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-firmer

CATTLE: Live cattle futures fell for the fourth day in the past five yesterday and may be poised for further weakness on eroding cash prices and soft beef demand. Choice cutout values dropped 63 cents yesterday to an average of $262.38 on light movement of 94 loads. Sluggish cash activity is expected the rest of the year with packers not pursuing animals aggressively and retailers likely waiting until after the holidays to restock inventories. Live steers averaged $137.19 last week, down $2.50 from the previous week and the second consecutive weekly decline. Live cattle technicals have turned more bearish after February futures yesterday fell to $135.975, the contract’s lowest closing price since $135.85 on Nov. 4, and settled below the 100-day moving average for the first time since Nov. 2.

HOGS: Lean hog futures may bounce back from yesterday’s drop on more signs of a seasonal low in the cash market. The CME lean hog index is up 60 cents today to $72.93, the highest since Nov. 22. February hogs dropped $1.325 yesterday but still finished $6.545 above today’s index quote, roughly $1.50 more than the average increase into mid-February over the past five years. Pork cutout values rose 67 cents yesterday to $86.49, though hams fell $3.32. Movement totaled about 366 loads. Bears have an overall near-term technical advantage in lean hogs, but recent price action suggests a market bottom is in place. The next upside price objective for bulls is to close February futures above solid resistance at the November high of $84.675. For bears, the next downside objective is closing the February contract below solid support at the December low of $75.35.

 

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