Ahead of the Open | January 4, 2022

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GRAIN CALLS

Corn: 2 to 6 cents higher.

Soybeans: 4 to 8 cents higher.

Wheat: 1 to 9 cents higher.

GENERAL COMMENTS: Corn and soybean futures rose overnight on concerns hot, dry conditions in South America will harm yield prospects. Wheat futures also firmed. Malaysian palm oil futures rose to a four-week closing high as flooding stoked concern over production. Nymex crude rose around 75 cents. U.S. stock index futures are higher and the U.S. dollar index is slightly firmer this morning.

Crop Consultant Dr. Michael Cordonnier cut his Brazilian soybean crop estimate for the second week in a row, by 2 MMT to 138 MMT, and reduced his Brazilian corn crop estimate by 1 MMT to 113 MMT. Extreme weather continues in Brazil, with some southern areas of the country staying dry for over 60 days and northern growing regions not seeing any sunshine over that period.

For Argentina, Cordonnier said has been hesitant to cut the country’s soybean crop estimate too much “because the crop was still being planted and in vegetative development.” But with above-normal temperatures and below-normal rainfall continuing to stress soybeans in northern and eastern areas of the country, he lowered his estimate by 3 MMT to 45 MMT.

The government of Brazil’s Mato Grosso do Sul today declared an emergency situation due to the lack of rain. A state of emergency was previously declared in Parana due to drought, while some municipalities in Rio Grande do Sul (drought) and Bahia (flooding) also have declared emergencies.

Individual state crop condition ratings released yesterday showed major deterioration of the HRW wheat crop during December. The “good” to “excellent” ratings for HRW wheat plunged 29 points in Kansas, 28 points in Oklahoma, 13 points in Colorado and 25 points in Nebraska during December. The “good” to “excellent” ratings for HRW wheat improved two points in South Dakota and five points in Montana over the past month. The largest SRW producer Illinois reported a four-point drop in “good” to “excellent” ratings during December. Most SRW states did not update crop ratings.

President Joe Biden promised to “fight for fairer prices” for farmers and consumers yesterday as he announced plans to combat the market power of the giant conglomerates that dominate meat and poultry processing. Biden joined USDA Secretary Tom Vilsack and Attorney General Merrick Garland to meet virtually with ranchers and farmers to hear complaints about consolidation in the industry, ratcheting up a campaign blaming anti-competitive practices in the industry for contributing to surging food inflation.

Tunisia tendered to buy 125,000 MT of soft wheat, 75,000 MT of durum and 75,000 MT of feed barley from unspecified origins.

 

CORN: Large speculators raised their net long position in the corn market for the fourth consecutive week, data from the Commodity Futures Trading Commission (CFTC) showed. The managed money net long in corn futures and options rose to 373,345 contracts during the week ended Dec. 28, the largest since late April, according to the CFTC’s weekly Commitments of Traders report.

SOYBEANS: Speculators in the last two weeks of 2021 staged their largest soybean buying streak in well over a year as prices rallied to five-month highs. In the week ended Dec. 28, the managed money net long in soybean futures and options rose 25,156 contracts to 98,080 contracts, the highest since mid-June.

WHEAT: Large speculators expanded their net short in SRW wheat late last month, CFTC data showed. The managed money net short in SRW futures and options rose to 11,773 contracts from 11,007 contracts.

 

LIVESTOCK CALLS

CATTLE: Steady-firm

HOGS: Steady-weak

CATTLE: February live cattle may find support from strength in wholesale beef. Choice cutout values rose 77 cents yesterday to an average of $266.03, the highest since Dec. 7. Movement totaled 129 loads, of which Choice cuts accounted for 81 loads, suggesting retailers continued buying pricier and high-graded beef. Traders are waiting for this week’s cash cattle market to develop, but packers’ resumption of buying cattle for full schedules may boost prospects for higher cash prices again. Last week’s average live steer price of $139.59 was up $3.95 from the previous week and was the first weekly gain in four. February live cattle fell 77.5 cents yesterday to $138.925, while March feeder cattle fell 42.5 cents to $169.525.

HOGS: Hog futures may see carryover pressure from yesterday’s slide to two-week lows on softness in cash and wholesale markets. Pork carcass cutout values fell $5.33 yesterday to $86.02, led by a drop of over $11 in loins, though movement was strong at 381 loads. Traders likely need to see prices stabilize and sustain movement strength before buying actively. The CME lean hog index firmed a dime to $71.85. February futures’ unusually large $9.375 premium to index may limit buying interest in futures. February lean hogs fell 35 cents yesterday to $81.125, the lowest closing price since $79.475 on Dec. 20.

 

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