Ahead of the Open | January 13, 2022

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GRAIN CALLS

Corn: 2 to 5 cents lower.

Soybeans: 14 to 18 cents lower.

Wheat: 3 to 8 cents lower.

GENERAL COMMENTS: Winter wheat futures extended yesterday’s declines, which were triggered by USDA’s higher-than-expected winter wheat plantings estimate. Corn and soybeans also fell overnight. Malaysian palm oil futures rose over 2% to an all-time closing high on concerns a labor shortage will hurt output. Nymex crude is down slightly but still near yesterday’s two-month high. U.S. stock index futures rose slightly while the U.S. dollar index fell to a two-month low.

South American weather remains a key focus for traders. Southern Brazil is expected to see a shift in its weather pattern this weekend as Parana and nearby areas benefit from rain before showers and thunderstorms become better organized Jan. 16-23 from Rio Grande do Sul to Parana, World Weather Inc. said. “Rain 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.”

Argentina is expected to produce 40 MMT of soybeans this year, according to the Rosario Grain Exchange, down 5 MMT from its previous estimate. The exchange slashed its corn crop estimate by 8 MMT to 48 MMT. For soybeans, “December’s water stress has slowed down growth, causing flower abortion, leaf burning, seedling death in the most affected areas and the abandonment of (planting) fields is beginning to be abandoned,” the exchange said.

Ukraine’s ag ministry forecasts the country will export 65.2 MMT of grain in 2021-22, up 800,000 MT from its prior outlook. That would be up nearly 46% from last year’s grain shipments. Through Jan. 10, the country’s grain exports were more than 23% ahead of last year’s pace after a record grain harvest.

Strategie Grains cut its forecast for European Union soft wheat exports in 2021-22 due to strong competition from the Black Sea region and Argentina. The consultancy now expects the bloc to ship 31.2 MMT of wheat this marketing year, down 300,000 MT from its previous forecast.

China said it would raise domestic soybean output sharply in a drive to boost self-sufficiency. The country has set a goal to produce about 23 MMT of soybeans by end of 2025, up 40% from current output levels of 16.4 MMT, the ag ministry said.

The International Grains Council (IGC) raised its forecast for 2021-22 global wheat production, partly driven by an improved outlook for the crop in Australia. In its monthly update, the IGC increased its 2021-22 world wheat crop outlook by 4 MMT to 781 MMT.

India’s edible oil imports in 2022 are expected to fall by 2% as the country boosts domestic production, the Malaysian Palm Oil Council (MPOC) said. Total imports of oils and fats are forecast at 13.8 MMT, down from 14.1 MMT in 2021.

Japan purchased 107,555 MT of wheat from its weekly tender, including 56,095 MT from the U.S. and 51,460 MT from Canada. South Korea tendered to buy up to 140,000 MT of optional origin corn.

 

CORN: USDA reported net U.S. corn sales of 457,700 MT for the week ended Jan. 6, up 79% from the previous week but down 59% from the average for the previous four weeks. Exports of 1.012 MMT were up 3% from the previous week but down 1% from the prior four-week average. Sales fell short of trade expectations for 500,000 MT to 1.5 MMT.

SOYBEANS: Net U.S. soybean sales of 735,600 MT were up 92% from the previous week but down 1% from the prior four-week average. China was a lead buyer at 301,800 MT, including 264,000 MT switched from unknown destinations and decreases of 1,200 MT, along with Mexico at 187,900 MT and Egypt at 175,800 MT. Expectations ranged from 400,000 MT to 1.2 MMT.

WHEAT: Net U.S. wheat sales of 264,400 MT were up “noticeably” from the previous week, but down 20% from the prior four-week average. Expectations ranged from 150,000 to 400,000 MT.

 

LIVESTOCK CALLS

CATTLE: Steady-weak

HOGS: Steady-firm

CATTLE: Live cattle futures may face continued pressure from softer cash prices. Cash prices averaged $136.49 so far this week, down nearly $2.00 from last week's average. Packers have seen production margins surge nearly 50% over the past week as boxed beef prices climbed and cash cattle prices weakened. As of Wednesday, HedgersEdge.com estimated gross margins at nearly $324 per head, up from just shy of $2.18 the previous week. Wholesale beef prices extended a recent rally, with Choice cutout values rising $1.71 yesterday to $279.93, the highest since Nov. 26 and up over $19.00 from a mid-December low at $260.26. Movement remained strong at 152 loads.

Net weekly U.S. beef sales for 2022 totaled 9,700 MT and were primarily for Japan (2,600 MT, including decreases of 300 MT), Mexico (1,400 MT), South Korea (1,400 MT, including decreases of 500 MT), USDA reported. February live cattle futures fell $1.10 yesterday to $136.575, while March feeder cattle tumbled $1.325 to $165.025.

HOGS: Lean hog futures may extend yesterday’s gains on firming cash fundamentals. The CME lean hog index fell 7 cents to $75.06, but is still near the highest levels since mid-November. Pork cutout values rose $2.84 yesterday to an average of $84.46, led by gains of over $9.00 in both bellies and hams. Net U.S. weekly pork sales for 2022 totaled 19,800 MT primarily for Mexico (10,100 MT, including decreases of 300 MT), Japan (3,100 MT, including decreases of 500 MT) and South Korea (2,100 MT, including decreases of 600 MT). February lean hog futures yesterday rose $1.00 to $78.85, the contract’s first gain in four sessions.

 

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