Market Snapshot | January 14, 2022

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Corn futures are narrowly mixed at midmorning.

  • Corn futures held chart support and bounced back from yesterday’s declines but are still poised to close lower for the week, pressured in part by expectations for rain in dry crop areas of South America.
  • Paraguay and most of Brazil’s Rio Grande do Sul will see little rain and hot temperatures through tomorrow, 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,” World Weather said today.
  • 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.
  • March corn fell to 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. Resistance is seen at the 20- and 40-day moving averages from $5.98 1/2 to $5.99 1/2.

Soy complex futures are lower, with March soybeans down about 8 cents, March soymeal down about $1.00 and March soyoil down around 50 points

  • Soybeans fell to the lowest levels in over a week and are on track for a sharp weekly drop amid expectations rains will fall on southern Brazil next week.
  • In Argentina, a shift in the weather pattern should bring frequent rounds of rain through Jan. 23, at least temporary improving crop and soil conditions, World Weather said. “Many crops will be left in much better shape than they are late this week, but permanent crop damage has occurred and crop yields will still be lower than what was projected earlier in the season.”
  • 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, reflecting slower crush demand as China’s hog sector used less meal
  • March soybeans fell as low as $13.63 3/4, the contract’s lowest intraday price since $13.55 1/2 on Jan. 4. The front-month contract is poised to end the week down sharply from last week’s $14.10 1/4 close. Support is seen at the 20-day moving average of $13.60 1/2.

Wheat futures are broadly lower, led by declines of 11 to 15 cents in HRW contracts.

  • Wheat futures extended the week’s losses, fueled in part by USDA’s higher-than-expected U.S. winter crop seedings estimates and slow exports.
  • 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.
  • March HRW futures fell as low as $7.43 3/4, the contract’s lowest intraday price since $7.37 1/4 on Oct. 15, and the lead contract is heading for its third straight weekly decline. March spring wheat fell to the lowest levels since late September.

Live cattle futures are firmer and feeders are lower in narrow-range trading at midmorning.

  • Live cattle futures firmed but are still at risk for a second consecutive weekly decline, as continued cash market erosion offsets strength in the boxed beef market.
  • The cash market likely will post a lower average price for the fifth week in the past six as Covid absences slow slaughter rates. This week’s estimated slaughter through yesterday was up 5,000 head (1.1%) from the same period past week but down 17,000 head (3.6%) from year-ago.
  • Live steers averaged $136.49 this week through early yesterday, 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.
  • Choice cutout values rose $2.93 yesterday to $282.86, the highest daily average since $288.20 on Nov. 15 and reflecting improved demand from retailers restocking after the holidays.
  • 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.
  • February live cattle futures are trading within the past week’s range, after ending last week at $137.325. Support is seen at this week’s low of $136.025 and the 100-day moving average at $136.10. Resistance is seen at the 20- and 50-day moving averages, both around of $137.95.

Lean hog futures are sharply higher, led by a gain of over $3.00 in February.

  • Hog futures are poised for the first weekly gain in the past three after a sharp jump in the wholesale pork market indicated a pick-up in retail demand.
  • Pork cutout values soared $10.82 yesterday to $95.28, the highest daily average since Nov. 11, as hams jumped over $29 and loins rose over $12. Movement was relatively slow at 298 loads.
  • The CME index fell 46 cents to $74.60, the second decline in a row but still up $3.44 over the past three weeks.
  • Through yesterday, estimated hog slaughter at 1.79 million head was 63,000 head (3.4%) below last week and 186,000 (9.4%) under the same period last year. It's unclear to what extent lower kills reflect Covid absences at processing plants and how much is due to smaller market-ready supplies.
  • Barring a late selloff, February lean hogs will end with a solid advance from last week’s close at $79.65. Resistance is seen at the 20-day moving average around $81.20, slightly above today’s high at $81.075.
  • Support in February futures is seen at yesterday’s low of $77.05, a one-month low. A drop below that level would have bears targeting the Dec. 8 low of $75.35, then the Oct. 28 low at $74.05.
 

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