Ahead of the Open | January 19, 2022
GRAIN CALLS
Corn: 3 to 6 cents higher.
Soybeans: 12 to 16 cents higher.
Wheat: 9 to 15 cents higher.
GENERAL COMMENTS: SRW wheat futures climbed near a three-week high overnight, while corn reached a two-week high and soybeans gained back all of Tuesday’s losses and more. Malaysian palm oil futures rose to a three-month high and Nymex crude oil posted a seven-year high for the second straight day. U.S. stock index futures rebounded slightly after yesterday’s selloff, while the U.S. dollar index is around 165 points lower this morning.
South America weather continues to be in focus. Paraguay and far southern Brazil “will see little to no rain of significance and hot temperatures through Saturday,” World Weather Inc. said today. “Crop stress will increase as moisture from recent rain is lost to evaporation while areas that missed out on rain see further declines in yields.”
USDA’s attache in Brazil lowered its estimate for the country’s soybean production, saying drought in some regions and excessive rain in others has dampened prospects for a record crop. The attache’s estimate at 136 MMT is lower than USDA’s 139 MMT projection in last week’s Supply and Demand Report.
Argentina produced a record wheat crop of 21.8 MMT in the 2021-22 marketing year, topping the country’s previous high of 19 MMT in 2018-19 crop year, the Buenos Aires Grains Exchange said. The harvest, which ended this month, came in 2.8 MMT higher than the exchange’s initial estimate.
USDA reported two more cases of highly pathogenic avian flu in wild birds late yesterday, one in South Carolina, where Friday’s infection was found in a wild duck, and another in North Carolina. USDA said all three confirmed cases are a Eurasian H5 type of the virus and the H5N1 strain. There have been no trade disruptions for U.S. poultry from the avian flu findings in wild birds.
Japan received no offers from a tender to buy 80,000 MT of feed wheat and 100,000 MT of feed barley. Jordan tendered to purchase 120,000 MT of optional origin milling wheat. Iran tendered to buy 60,000 MT of milling wheat.
CORN: March corn futures overnight rose as high as $6.08 3/4, the contract’s highest intraday price since $6.09 3/4 on Jan. 5. Spillover from stronger wheat prices may support corn for the second day in a row.
SOYBEANS: March soybeans overnight rose as high as $13.78 1/2, after dropping 8 1/2 cents yesterday to $13.61 1/4, the contract’s lowest settlement since $13.55 1/2 on Jan. 3. Support is seen at yesterday’s intraday low at $13.49 3/4.
LIVESTOCK CALLS
CATTLE: Steady-weak
HOGS: Steady-firm
CATTLE: Live cattle futures may face pressure from expectations for further cash market weakness, though surging wholesale beef prices likely will provide underlying support. Live steers last week averaged $136.61, down $1.80 from the previous week and the fifth weekly decline in the past six. Choice cutout values rose $1.63 yesterday to $289.49, the highest daily average since Nov. 5. Strong retailer demand and reduced packer production, partly due to Covid-related worker absences, contributed to strength in wholesale beef prices. USDA estimated cattle slaughter through the first two days of the week at 230,000 head, up 3,000 head from last week and even with year-ago.
HOGS: Lean hog futures may gain followthrough support from yesterday’s gains and strengthening cash fundamentals. The next CME lean hog index is up another 88 cents to $76.78, the highest since Nov. 10. Pork cutout values fell $4.73 yesterday to $87.21, erasing a morning gain as primal hams fell over $10. Movement totaled about 332 loads. The cutout market as a whole remains volatile, with ham prices leading the volatility and packers continuing to struggle sustaining retailer buying interest above $90.00. April lean hog futures yesterday rose 82.5 cents to $89.275, matching the Jan. 6 close for the highest settlement since Oct. 1.
