Ahead of the Open | December 6, 2021

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GRAIN CALLS

Corn: 3 to 4 cents lower.

Soybeans: 3 to 4 cents lower.

Wheat: 2 to 7 cents lower.

GENERAL COMMENTS: Soybean futures climbed near a two-week high overnight before fading. Corn and wheat futures extended last week’s declines. Malaysian palm oil futures rose over 2.0% on expectations for tightening supplies. Nymex crude oil rose over $2, while the U.S. dollar index is slightly firmer this morning.

USDA reported a daily sale of 130,000 MT of soybeans for delivery to China during the 2021-22 marketing year. Today’s announcement follows four daily soybean sales last week totaling 548,000 MT for delivery to China or “unknown destinations” during the 2021-22 marketing year.

Large speculators slashed net long positions in corn, soybeans and wheat markets in late November as prices tumbled, Commodity Futures Trading Commission data showed. During the week ended Nov. 30, managed funds cut net long positions in corn futures and options by 51,423 contracts, to 315,269 contracts, the lowest since late October.

USDA Secretary Tom Vilsack Friday said the agency will unveil biofuel aid once EPA releases its proposal for 2021 and 2022 Renewable Volume Obligations (RVOs) under the RFS. His comments indicate the Biden administration is looking to temper potential biofuel industry disappointment on rumored lower 2020 and 2021 biofuel RVOs by announcing them alongside favorable moves on SREs and Covid-19 assistance for biofuel producers.

Russian wheat prices fell for the first week in the past seven amid reports that the world's largest wheat exporter is considering an export quota that would be less restrictive than feared. Russian wheat with 12.5% protein loading from Black Sea ports for supply in December was quoted at $337 per MT free on board (FOB) at the end of last week, down $3 from the previous week, the IKAR consultancy said in a note. Sovecon, another consultancy, pegged wheat down $3 to $340 per MT.

China's corn output rose 4.6% in 2021 to 272.6 MMT, the country’s statistics bureau said. China's 2021 corn planted acreage rose 5% to 43.32 million hectares.

Saudi Arabia purchased 689,000 MT of wheat (likely feed quality), with the seller having the option of sourcing from the European Union, Black Sea region, North America, South America or Australia. Jordan tendered to buy 120,000 MT of optional origin milling wheat. 

 

CORN: March corn futures rose three days in a row to close last week but still ended down 7 3/4 cents for the week. The market may extend the past month’s sideways pattern as lagging exports offset strong domestic ethanol demand. Wheat futures may also factor into corn’s direction this week. USDA’s monthly Supply and Demand report on Thursday is not expected to show major changes from last month.

SOYBEANS: January soybeans futures overnight rose as high as $12.74 3/4, the highest intraday price since $12.81 on Nov. 24, before slipping to losses. The lead contract ended last week strong after USDA reported four daily sales totaling 548,000 MT of soybeans for delivery to China or “unknown destinations” during the 2021-22 marketing year. The potential for additional export business combined with strengthening chart patterns may help futures extend gains this week, though generally favorable South American growing conditions may limit price upside.

WHEAT: Winter wheat futures are poised to extend last week’s losses, the first weekly declines in four weeks, amid ideas the markets have established a near-term top. March SRW wheat futures dropped 36 1/2 cents last week, while March HRW futures fell 16 1/2 cents. Traders will watch for updates on crops in top producers such as Australia, where excess rains during harvest have raised concern about lower quality.

 

LIVESTOCK CALLS

CATTLE: Steady-weaker

HOGS: Steady-mixed

CATTLE: Packers continued to bid up for cattle last week, though futures’ 1.6% decline indicates traders believe the market is near a short-term top. But tight animal supplies should limit the downside. February live cattle futures fell 62.5 cents Friday to $138.95, down 1.6% from a week ago and the first weekly decline in the past three. Choice cutout values rose $2.34 Friday to an average of $274.36, down from $280.01 at the end of the previous week but up from a four-month low Dec. 1.

Workers at Cargill's beef-processing plant in High River, Alberta, voted in favor of the company's latest contract offer on Saturday, averting a strike. The plant processes up to 4,500 head of cattle per day, or 35% of Canada's beef-processing capacity.

HOGS: Recent trade in winter-month lean hog futures suggests traders may sense the cash market is near a seasonal low. But the cash index is down 33 cents today, ending a modest two-day increase to finish last week. Until the cash index turns consistently higher, buying in hog futures is likely to be limited given their premiums to the cash index. February lean hog futures fell 50 cents Friday to $81.50, up marginally from $81.025 at the end of last week. Futures showed some short-lived bouts of strength this week but remained burdened by slumping wholesale pork and weak market psychology. Slaughter last week totaled an estimated 2.667 million head, down 4.3% from the same week in 2020. Slaughter year-to-date was down 2.1% from the same period last year.

 

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