Ahead of the Open | December 22, 2021
GRAIN CALLS
Corn: 5 to 6 cents higher.
Soybeans: 14 to 16 cents higher.
Wheat: 4 to 8 cents higher.
GENERAL COMMENTS: Corn futures surpassed $6.00 overnight and soybeans climbed near a four-month high amid ongoing concerns dry conditions will pinch South America’s crop production. Wheat futures jumped to two-week highs. Malaysian palm oil was higher, while Nymex crude oil was little-changed overnight. The U.S. dollar index is more than 200 points lower this morning.
U.S. gross domestic product increased at a 2.3% annualized rate in the third quarter, the Commerce Department said. That was up from its prior forecast of 2.1% growth but still down sharply from 6.3% in the first quarter and 6.7% growth in the second quarter.
Pork prices are rising, but industry profits are not, due to increased transportation costs, supply bottlenecks and delays and increased labor costs throughout the pork chain, according to a report from economists at Iowa State University, North Carolina State University and the National Pork Producers Council (NPPC). Those factors were either causes of or exacerbated by the Covid-19 pandemic.
USDA releases its monthly Cold Storage Report at 2 p.m. today. Pork stockpiles usually decline about 60.8 million lbs. during November, while beef supplies typically shrink by about 300,000 lbs., based on five-year averages.
EPA is currently evaluating the use of dicamba and whether it can be sprayed on GMO cotton and soybean plants with resistance to the chemical. EPA said it has received around 3,500 reports in 2021 that more than 1 million acres of soybeans that were not dicamba-tolerant had been damaged from chemical drift of the herbicide. EPA noted the level of impacts and areas where the events took place are similar to last year, even though there were tighter use restrictions on dicamba.
CORN: March corn futures overnight rose as high as $6.04 1/2, topping the August high and reaching the highest intraday price since $6.16 1/2 on July 1. A push above the July high may have bulls targeting the June high at $6.33, but the market likely needs to see strong demand in USDA’s export sales reports to sustain upside. Weekly ethanol production numbers will be updated later this morning.
SOYBEANS: March soybeans rose as high as $13.29 3/4 overnight, the highest intraday price since $13.41 3/4 on Aug. 30. Little rain is expected for dry areas of southern Brazil over the next week. Argentina is also expected to remain dry into the middle of next week.
WHEAT: March SRW wheat rose as high as $8.08 overnight, the highest intraday price since $8.12 on Dec. 8. March HRW futures reached $8.47 1/2, the highest since Dec. 3.
LIVESTOCK CALLS
CATTLE: Mixed-weaker
HOGS: Steady-mixed
CATTLE: Cattle futures finished strong yesterday but struggle to extend gains, absent broader strength in other commodities, as cash and wholesale beef markets soften. Cash trade around $135 was reported yesterday in the Southern Plains, down about $2.00 from last week’s average live steer price. Packer interest has waned in a holiday-shortened week and cash prices likely will continue to slip the rest of the year. Choice cutout values fell 99 cents yesterday to an average of $261.39, while Select fell 75 cents to $249.92. Movement totaled 116 loads. USDA’s monthly Cattle on Feed Report tomorrow is expected to feedlot placements rose 3.2% in November compared with the same month a year earlier, based on a Reuters survey. Compared to pre-Covid November 2019, last month’s projected placements would be down 6.2%. February live cattle rose 95 cents yesterday to $136.925. Chart levels to watch include a five-week low at $135.50, reached yesterday.
HOGS: Hog futures may extend yesterday’s rally to four-week highs on strengthening cash fundamentals, but the lead-month February contract’s wider-than-normal premium to the CME lean hog index may limit buying interest. The CME lean hog index is up another 9 cents to $73.02, the highest since Nov. 22 and over $9.00 above February futures, nearly double the normal seasonal gain in cash prices from now until mid-February when the contract will expire. Pork cutout values fell $1.58 on Tuesday to $84.91, near a two-week low, on movement of about 295 loads. USDA’s Hogs and Pigs Report Dec. 23 is expected to show the hog herd shrank nearly 3.0% from last year. February lean hogs rose $2.95 yesterday to $82.425, the highest settlement since $84.25 on Nov. 24.
