Ahead of the Open | December 30, 2021
Corn: 4 to 6 cents lower.
Soybeans: 15 to 17 cents lower.
Wheat: Steady to 3 cents lower.
GENERAL COMMENTS: Corn and soybean futures posted corrective losses overnight, while wheat futures were steady to lower. Malaysian palm oil was up slightly, while crude oil posted two-sided trade. U.S. stock index futures and the U.S. dollar index are slightly firmer this morning.
Soy growers in Brazil’s top producer Mato Grosso state began harvesting fields, farmers told Reuters, marking an early start to a record-setting season with potential output above 140 MMT. The start of harvesting right after Christmas represents an advance of about 20 days from the prior season, when bad weather delayed farmers in Mato Grosso, where an estimated 38 MMT will be produced. By Feb. 20, most of Mato Grosso’s soybeans will likely be harvested.
Russia’s wheat export tax for Jan. 12-18 will be $98.20 per MT, based on an indicative price of $340.40 per MT, up from the current $94.90 a MT rate. The wheat export tax has surged more than 250% from the beginning of June when Russia first started using the sliding scale. Russia also plans to implement a stronger wheat export tax formula with a higher multiplier if prices rise to $375 per MT. Russia also plans to set its wheat export quota at 8 MMT from Feb. 15 to June 30, 2022, to ensure domestic supplies and limit price increases.
China will auction 500,000 MT of state-owned wheat reserves on Jan. 5. The auction is only open to flour millers and cannot be resold. Beijing sold 891,938 MT of wheat from state reserves in October, which was open to both milling plants and feed and livestock firms.
USDA’s Food Safety and Inspection Service (FSIS) issued a public health alert for an “undetermined amount of imported meat and poultry products from China,” but no recall has been issued as FSIS has not been able to identify and contact the importers. “The total amount of ineligible product is undetermined because the investigation is ongoing,” FSIS said.
CORN: Net U.S. corn sales totaled 1.247 MMT for the week ended Dec. 23, up 27% from the previous week but down 2% from the average for the previous week. Exports of 921,400 MT were down 16% from the previous week and down 9% from the prior four-week average. The sales were slightly above trade expectations ranging from 500,000 MT to 1.1 MMT.
SOYBEANS: Net U.S. soybean sales for the week ended Dec. 23 totaled 524,000 MT, down 35% from the previous week and 56% from the prior four-week average – and a marketing-year low. China was a prominent buyer, at 432,800 MT, including 394,000 MT switched from unknown destinations and decreases of 9,300 MT. Sales fell short of expectations ranging from 700,000 MT to 1.2 MMT. Rains fell on some of the dry areas of southern Brazil overnight, which provided the price pressure, though these rains will provide just temporary relief and didn’t reach all of driest locations.
WHEAT: Net weekly U.S. wheat sales totaled 199,500 MT were down 53% from the previous week and down 43% from the prior four-week average. Sales were expected to range from 200,000 to 500,000 MT. Winter wheat futures may find underlying support from concern over potential winterkill as a blast of arctic air hit the country’s midsection.
CATTLE: Live cattle futures may be supported by reports cash cattle traded at $2 to $3 higher prices compared with last week in the northern market. Trade in the southern market remained quiet, though the firmer northern trade may prompt other packers to raise bids. Also, Choice cutout values rose $1.05 yesterday to $265.71, the highest daily average since Dec. 7, on solid movement of 135 loads. Net weekly U.S. beef sales totaled 6,300 MT, down 48% from the previous week and down 55% from the prior four-week average. February live cattle rose $1.325 yesterday to $140.725.
HOGS: Lean hog futures may face pressure from weakness in the wholesale pork market, thought that may be offset by a strengthening cash index. Pork cutout values fell $2.60 yesterday to $84.29, as a decline of $16 in loins offset gains in bellies, hams and ribs. The cutout average is the lowest since Dec. 8. Movement was relatively light at 236.44 loads. Today’s CME lean hog index is up 38 cents to $72.20. Net U.S. pork sales totaled 3,200 MT, down 89% from the previous week and down 90% from the prior four-week average. February lean hogs rose $1.20 yesterday to $83.825, still down from a four-week intraday high of $84.65 posted earlier this week.