Ahead of the Open | January 7, 2022

GRAIN CALLS

Corn: 3 to 4 cents lower.

Soybeans: 8 to 10 cents lower.

Wheat: 7 to 15 cents lower.

GENERAL COMMENTS: Wheat futures extended a two-week slide overnight, with winter wheat contracts dropping to the lowest levels since mid-October. Corn and soybean futures also fell but are still poised to post gains this week. Malaysian palm oil futures surged 6.5% this week, the biggest weekly gain in three months, while Nymex crude oil rose above $80 to a two-month high. U.S. stock index futures are slightly firmer the U.S. dollar index is down around 200 points this morning.

USDA reported daily sales of 120,000 MT of soybeans to "unknown destinations" for 2022-23 and 176,784 MT of corn to Mexico in the current marketing year.

The U.S. economy added 199,000 non-farm payrolls in December, well below the 400,000-plus economists expected. The unemployment rate dropped to 3.9%.

Grain markets will continue to monitor South American weather closely after at least three private analysts cut crop estimates for Argentina and Brazil this week. In Argentina and Brazil’s Rio Grande do Sul, a strong ridge of high pressure will dominate the weather pattern through the next seven to nine days, causing mostly dry conditions and above average temperatures, World Weather Inc. said. Crop stress will increase as topsoil and subsoil moisture depletes, the forecaster said, though those regions have increased rain prospects Jan. 15-19.

Brazil exported a record 1.13 MMT of pork last year, industry group ABPA said, topping the previous high of 1.02 MMT in 2020. China accounted for about half of Brazil’s exports, as shipments to the country rose 3.9% to 533,700 MT.

Absenteeism at slaughter plants, thought to be due to a rise in Covid cases, has reduced U.S. slaughter this week. Through Thursday, USDA’s federally inspected slaughter dropped more than 5% from week-ago for cattle and 1.7% for hogs. Industry sources expect just a temporary disruption and not a repeat of the widespread shutdowns in spring 2020.

Jordan tendered to buy 120,000 optional origin milling wheat.

CORN: March corn traded within yesterday’s range overnight, with the contract falling as low as $5.99, just above the 20-day moving average at $5.97 1/2. Further downside support is seen at the 40-day moving average around $5.89 3/4 and this week’s low at $5.84 3/4. March corn is still up from $5.93 1/4 at the end of last week.

SOYBEANS: March soybeans fell as low as $13.76 overnight but remain within yesterday’s range and are on track to post a gain for the fifth week in the past six, after ending last week at $13.39 1/4. A push above resistance at this week’s high at $13.99 may have bulls targeting the contract high at $14.45 1/2, posted in June. Support is seen around the 10-day moving average at 13.69 1/4.

WHEAT: The wheat market’s technical posture has turned increasingly bearish as charts broke down the past two weeks. March SRW futures overnight fell as low as $7.35 1/2, the contract’s lowest intraday price since $7.34 3/4 on Oct. 15. Key downside levels include the 200-day moving average at $7.31 1/4. March HRW futures yesterday closed below its 100-day moving average for the first time since mid-July and fell as low as $7.54 1/2 overnight, the lowest since Oct. 21. March spring wheat dropped to $9.08 overnight.

LIVESTOCK CALLS

CATTLE: Steady-weak

HOGS: Steady-firmer

CATTLE: Live cattle futures are poised for a weekly decline as cash markets slipped and slaughter rates slowed to start the year. Live steers averaged $138.78 so far this week, down from last week’s average of $139.59, USDA reported. Feedlot asking prices on remaining supplies are above prices received earlier this week, which may push some animal sales into next week. Cash weakness has been tempered to some extent as strength wholesale beef indicates improved retail demand. Choice cutout values rose $1.63 yesterday to $268.56, the highest daily average since Dec. 6. Packers slaughtered an estimated 450,000 head of cattle so far this week, down 25,000 from the same period last week. February live cattle futures rose 10 cents yesterday to $137.35, down from $1 at the end of last week.

HOGS: Lean hog futures are on track for a weekly gain behind strengthening cash fundamentals. Pork cutout values rose $3.64 yesterday to $89.56, led by gains of nearly $10 in hams and $12 in loins. Movement yesterday was strong at over 411 loads and averaged 388 loads the first four days this week, a sign of strong post-holiday retailer restocking. The CME lean hog index dropped 30 cents to $73.57, but the benchmark remains near the highest levels since mid-November. April futures have been particularly strong this week, closing yesterday at $89.275, a three-month high. February futures rose 67.5 cents to $82.95, up from $81.475 at the end of last week.