Ahead of the Open | January 12, 2022

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GRAIN CALLS

Corn: Steady to 2 cents lower.

Soybeans: 2 to 4 cents lower.

Wheat: HRW and SRW 3 to 6 cents lower, spring wheat steady to 2 cents higher.

GENERAL COMMENTS: Corn, soybean and winter wheat futures fell modestly overnight in narrow-range trade ahead of USDA reports. Malaysian palm oil futures fell for the first day in four, while Nymex crude oil rose above $82 a barrel, a two-month high. U.S. stock index futures rose slightly and the U.S. dollar index is down more than 300 points this morning.

USDA reported daily sales of 100,000 MT of corn to unknown destinations for 2021-22 and 132,000 MT of soybeans to China for 2022-23.

USDA releases its final 2021 corn and soybean crop estimates, Dec. 1 grain stocks, winter wheat seedings, along with updated U.S. and global balance sheets at 11 a.m. CT. Click here for pre-report estimates.

Inflation continued soaring late last year as prices for a wide array of consumer goods and services rose amid pandemic disruptions. The U.S. consumer price index surged 7.0% in December over the same month in 2020, the biggest year-over-year increase since June 1982. Excluding food and energy prices, so-called core CPI increased 5.5% year-over-year and rose 0.6% over November.

Aside from the USDA reports, focus is on South American weather, where extended heat and dryness has reduced crop potential but some rain may be on the way next week. World Weather says rain expected Jan. 16-23 in Brazil’s Rio Grande do Sul and Parana states “is not likely to be heavy in many areas, but at least some relief from dryness should occur and crops that have not been too badly harmed by dryness will respond to the moisture and yield potentials should increase," World Weather Inc. said. Today’s forecast is drier than yesterday’s outlook for Paraguay and southern Mato Grosso do Sul. Temperatures in Argentina yesterday ranged from 100 to 110 Fahrenheit with little rain.”

China’s ag ministry lowered its forecast for 2021-22 corn consumption amid slowing demand from both the feed sector and industrial users. The country’s 2021-22 corn consumption is now forecast at 287.7 MMT, down 3 MMT from last month, but that would still be up 5.5 MMT from 2020-21. It continues to call for corn imports of 20 MMT in the current marketing year, down 9.56 MMT from 2020-21. China’s ag ministry made no changes to the soybean balance sheet this month. It forecasts soybean imports will reached 102 MMT in 2021-22, up 2.22 MMT from the previous marketing year.

Foreign Agricultural Service (FAS) Administrator Dan Whitely estimated shipments of ag goods to China in December were $5 billion to $6 billion, bringing the 2021 total to about $36 billion. That would mark a new record for U.S. ag exports to China, but one that could be even higher if Beijing would remove barriers to trade, Whitely said. Whitley said he expects China will end up being around $5 billion to $6 billion shy of its Phase 1 ag commitments.

FranceAgriMer lowered its forecast for 2021-22 French soft wheat exports outside the European Union to 9 MMT, down 200,000 MT from last month.

Japan is seeking 80,000 MT of feed wheat and 100,000 MT of feed barley. Iran tendered to buy a nominal 60,000 MT of milling wheat from unspecified origins.

 

CORN: USDA is expected hike its final estimate for the 2021 U.S. corn crop by about 7 million bu., to 15.069 billion bu., based on a Reuters survey of analysts. The projected crop would be the second largest on record, trailing only the 2016 harvest of 15.146 billion bushels. March corn fell as low as $5.99 overnight after gaining 1 1/4 cents yesterday.

SOYBEANS: USDA is expected to increase its estimate for the 2021 U.S. soybean crop by about 8 million bu. to a record 4.433 billion bushels. USDA is also expected to reduce its projection for Brazil’s soybean crop by about 2.38 MMT, to 141.62 MMT. Argentina’s crop is expected to be cut 1.39 MMT, to 48.11 MMT. March soybeans fell as low as $13.79 overnight.

WHEAT: USDA’s Winter Wheat Seedings Report is expected to show all U.S. winter wheat plantings at 34.255 million acres, up from 33.648 million in 2021 and the highest acreage since 2016, based on a Reuters survey. March SRW wheat futures fell as low as $7.64 1/4 overnight after gaining 8 1/4 cents yesterday.

 

LIVESTOCK CALLS

CATTLE: Steady-firmer

HOGS: Steady-weaker

CATTLE: Live cattle futures may extend yesterday’s gains behind strength in wholesale beef, though a weaker cash market likely will limit the upside. Cash cattle traded at $136 to $137 yesterday, down around $1 to $2 from last week. Choice cutout values rose $2.18 yesterday to $278.22, the highest daily average since Nov. 26 and an indication of scaled-up demand from retailers restocking following the holidays. Movement totaled a strong 150 loads. February live cattle futures rose $1.425 yesterday to $137.675, the highest close since Jan. 4.

HOGS: Lean hog futures may face carryover pressure after dropping sharply the previous three sessions. Concerns over Omicron infections crimping demand and slowing packer processing rates may be weighing on futures, though we believe these concerns are overblown and futures are undervalued with the cash index rising. The CME lean hog index is up another 43 cents to $75.13, the highest since mid-November. February lean hog fell 52.5 cents yesterday to $77.85, the lowest closing price since Dec. 9 and only $2.72 above the lean hog index, a third of the premium from earlier this month. Pork cutout values fell $4.80 yesterday to $81.62, but movement was strong at 413 loads.

 

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