Ahead of the Open | January 14, 2022
Corn: 1 to 2 cents.
Soybeans: Steady to 2 cents higher.
Wheat: SRW and HRW 4 to 8 cents lower; HRS 10 to 12 cents lower.
GENERAL COMMENTS: Wheat futures extended declines overnight to reach three-month lows, while corn and soybeans were slightly firmer. Malaysian palm oil futures fell a day after closing at a record high. Nymex crude oil is up slightly after extending a rally to two-month highs. The U.S. dollar index is up slightly after falling to a two-month low.
Grain and livestock markets observe normal hours today. Markets and government offices will be closed for Martin Luther King Jr. Day on Monday. There will be on Pro Farmer market reports or commentary. Grain markets will reopen with the overnight session at 7 p.m. CT on Monday, Jan. 17, while livestock markets will resume trade at 8:30 a.m. CT on Tuesday, Jan. 18.
Dry areas of South America have greater rainfall chances as weather pattern shifts beginning today. Paraguay and most of Brazil’s Rio Grande do Sul will see little rain of significance and hot temperatures through tomorrow and increases in crop stress, World Weather Inc. said. But showers and thunderstorms are expected to increase Jan. 16-23 across Brazil and Paraguay with many areas seeing additional showers into Jan. 28. “The 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.”
China imported 8.9 MMT of soybeans in December, bringing its total for 2021 to 96.5 MMT, down 3.8% from 100.3 MMT in 2020. That was China’s first annual decline in soybean imports since 2018, as crush demand slowed amid reduced soymeal use by China’s hog sector given poor production margins and more wheat feeding.
China imported 654,000 MT of meat in December, bringing the yearly total for 2021 to 9.4 MMT, down 5.4% from 2020. China’s imports of beef jumped last year, but demand for pork fell sharply amid a surge in domestic supplies as the country’s hog sector rebuilt from the African swine fever outbreak that started in August 2019.
Russia’s wheat export tax for Jan. 19-25 will be $97.50 per metric ton, based on an indicative price of $339.30 per metric ton, down from the current rate of $98.20 per MT. This is the first time since the week of Sept. 22-28 the wheat tax has declined. The wheat export tax is still up 247% from the beginning of June when Russia first started using the sliding scale.
South Korea purchased 198,000 MT of corn – 133,000 MT optional origin and 65,000 MT South American or South African origin – and 50,000 MT of optional origin feed wheat. Algeria purchased an unspecified amount of milling wheat expected to be sourced from South America and the Black Sea region. Taiwan tendered to buy 49,395 MT of U.S. milling wheat.
CORN: March corn overnight fell to match yesterday’s low at $5.85 1/4, before recovering. The lead contract is on track to end lower than last week’s close at $6.06 3/4. Support is seen at last week’s low of $5.84 3/4.
SOYBEANS: March soybeans overnight fell as low as $13.63 3/4, the contract’s lowest intraday price since $13.55 1/2 on Jan. 4, before rebounding. The front-month contract is poised to end the week down sharply from last week’s $14.10 1/4 close.
WHEAT: March HRW futures overnight fell as low as $7.47, the contract’s lowest intraday price since $7.48 1/2 on Oct. 18, and the lead contract is heading for its third straight weekly decline. March spring wheat fell to the lowest levels since late September.
CATTLE: Live cattle rose yesterday on corrective buying and strength in the boxed beef market, but the upside likely will be limited by weaker cash prices. Choice cutout values rose $2.93 yesterday to $282.86, the highest daily average since $288.20 on Nov. 15. Movement totaled 127 loads. The boxed beef market’s gains likely reflect stepped-up demand from retailers restocking after the holidays. Live steers averaged $136.49 so far this week, down nearly $2.00 from last week's average, USDA reported. There may be a few cattle left to clean up this week, but feedlots may carry them into next week in hopes of a pickup in slaughter. Due to Covid slowdowns, this week’s estimated slaughter through Thursday was down 17,000 head (3.6%) from year-ago, though up 5,000 head (1.1%) from the same period last week. February live cattle futures ended yesterday at $137.00, down from last week’s close at $137.325.
HOGS: Lean hog futures are poised for a second consecutive weekly lower close, pressured by bearish technicals and concerns slower slaughter rates may be building a backlog of animals. The next CME index quote fell 46 cents to $74.60, the second decline in a row. Pork cutout values surged $10.82 yesterday to $95.28, the highest daily average since Nov. 11, as primal hams jumped over $29 and primal loins rose over $12. Movement was relatively slow at 298 loads.
Through yesterday, estimated hog slaughter at 1.79 million head was 63,000 head (3.4%) below last week and 186,000 head (9.4%) under the same period last year. Cash sources don’t have a good idea of how much is associated with Covid-related absences at processing plants and how much is due to reduced market-ready supplies. USDA’s December Hogs & Pigs Report implied hog slaughter should be around 6% under year-ago levels right now. February hog futures fell $1.00 yesterday to $77.85, matching a one-month closing low posted Jan. 11.