Ahead of the Open | January 10, 2022
Corn: 2 to 4 cents lower.
Soybeans: 5 to 7 cents lower.
Wheat: 5 to 10 cents lower.
GENERAL COMMENTS: Soybean futures fell overnight after reaching seven-month highs Friday, while corn and wheat were also under pressure. Malaysian palm oil futures fell slightly on a larger-than-expected inventory decline. Nymex crude oil dropped slightly but remained near two-month highs. U.S. stock index futures are under pressure, while the U.S. dollar index is more than 400 points higher this morning.
South American weather will be closely followed this week ahead of several USDA reports Jan. 12. Over the weekend, beneficial rain fell from central and southern Paraguay to a large part of Brazil’s Parana, though most of Rio Grande do Sul and Santa Catarina remained dry, World Weather Inc. said. Paraguay to western Parana and Rio Grande do Sul will see little to no rain of significance and hot temperatures through Saturday. Steady increases in crop stress and declining yield potentials are expected. Rio Grande do Sul will be driest and with soil moisture short crop in most of the state yields should decline.
In Argentina, crop damage will continue through Saturday due to excessive heat, little rain and dry soil, World Weather said. Early planted crops are reproducing and losing yield in this environment.
China sold all 506,568 MT of state-owned wheat reserves put up for auction last week. The 2014 and 2015 wheat stocks were sold at an average price of 2,707 yuan (around $425.00) per metric ton and was only available to millers. China will hold another auction with a similar quantity for sale Jan. 12.
Ukraine has exported 33.5 MMT of grain so far in 2021-22, up 23% from the same stage last year, ag ministry data showed. The total included 16.1 MMT of wheat, 5.3 MMT of barley and 11.8 MMT of corn.
South Korea tendered to buy up to 136,000 MT of optional origin corn. Iraq extended its deadline on a tender to buy at least 50,000 MT of milling wheat, which is restricted to about eight trading houses in the U.S. and Canada.
CORN: March corn futures traded within a narrow range overnight after ending last week at $6.06 3/4, up 13 1/2 cents for the week. Support is seen around the 20-day and 40-day moving averages at 5.98 1/2 and $5.90 1/2, respectively.
SOYBEANS: March soybeans also traded in a narrow overnight range after surging 23 cents Friday to $14.10 1/4, up 71 cents last week and the contract’s highest closing price since June 11. Chart levels to watch include last week’s intraday high at $14.15 and the 10-day moving average at 13.75 1/2.
CATTLE: Live cattle may face pressure from an eroding cash market, though strength in wholesale beef could mute selling. Live steers ended last week at an average of $138.58, down from the previous week’s average of $139.59. Cash direction may hinge on how much packing plants lose to Covid absenteeism. Worker shortages weren’t widespread or severe last week, but slower processing at some plants may have weighed on cash trade. Cattle slaughter last week was an estimated 620,000 head, down nearly 5.0% from the comparable week in 2021. Continued gains in wholesale beef suggests stepped-up demand from retailers re-stocking after the holidays. Choice cutout values rose $3.26 Friday to $271.82, up $6.56 for the week and the highest daily average since Dec. 6.
February live cattle ended last week at $137.325, down $2.375 for the week. March feeder cattle ended last week at $166.675, down $3.275 for the week. Support in February live cattle is seen around last week’s low at $136.375 and the 100-day moving average at $136.20.
HOGS: Lean hog futures may face carryover pressure after falling sharply Friday to close at the lowest levels in nearly three weeks. The CME lean hog index is up 16 cents to $73.73, near a seven-week high posted early last week. Despite February hog futures’ plunge Friday, the lead-month contract was still $5.92 above the cash index; that’s a relatively normal premium for this time of year, but sellers have momentum and may try to press the market lower. Pork cutout values ended last week at an average of $85.90, down $5.45 from a week earlier. Movement Friday totaled 392 loads. Signs of tightening hog supplies may underpin futures, as slaughter rates have lagged year-ago levels.
February lean hog futures fell $3.30 to $79.65 on Friday, down $1.825 on the week. Chart levels to watch include last week’s low at $79.275 and the 100-day moving average at $81.075.