Ahead of the Open | January 24, 2022
GRAIN CALLS
Corn: 4 to 6 cents lower.
Soybeans: 10 to 14 cents lower.
Wheat: 2 to 6 cents higher.
GENERAL COMMENTS: Wheat futures rose overnight, with HRW contracts reaching three-week highs, amid ongoing concerns over a potential Russian invasion of Ukraine. Corn futures weakened after rising earlier overnight to a 7 1/2-month high, while soybeans were also lower. Malaysian palm oil futures fell from a record high earlier today. Nymex crude oil is down more than $1.00. U.S. stock index futures extended last week’s losses and the U.S. dollar index is around 400 points higher this morning.
USDA reported daily soybean sales of 132,000 MT to China – half for 2021-22 and half for 2022-23. USDA reported a daily corn sale of 150,000 MT to unknown destinations for 2021-22.
Light and scattered rains fell across parts of southern Brazil over the weekend, though much of the rain was too light to counter evaporation, World Weather Inc. said. Much of Brazil will receive “very well distributed” rainfall the next two weeks. In Argentina, “significant” weekend rainfall further improved soil moisture and crop conditions while temperatures in northern locations were hot. Scattered showers are expected across the country the first half of this week.
The U.S. and Russia have agreed to continue negotiations over Russia’s buildup of troops along the Ukraine border, but the New York Times reported President Joe Biden is considering deploying troops to eastern Europe and the Baltics.
Russian wheat export prices fell last week as the ruble weakened against the U.S. dollar. Russian wheat with 12.5% protein content loading from Black Sea ports for supply in February stood at $326 per MT free on board (FOB), down $2.00 from the previous week, the IKAR agriculture consultancy said. SovEcon, another consultancy, pegged Russian wheat prices down $1.00 at $331 per MT.
Large speculators cut their net long position in corn futures and options to 326,523 contracts as of Jan. 18, a seven-week low and down about 18,000 on the week, U.S. Commodity Futures Trading Commission also data showed. In soybean futures and options, the managed money net long fell to 99,639 contracts from 106,879 a week earlier. In SRW wheat, the managed money net short fell slightly under 3,000 contracts to 24,901.
Malaysian palm oil prices, which already hit record high of 5,380 ringgit per MT this week, are expected to stay firm during the first half of the year amid concern over labor shortages and strong demand, based on a Reuters survey. Benchmark palm prices will average 4,000 ringgit per MT in 2022, down 3.4% from last year's average of 4,142 ringgit, according to the median estimate of a poll of 18 analysts.
China sold 468,738 MT of state wheat reserves it auctioned last week, 94% of the total put up for sale. The average sales price was 2,630 yuan (around $415) per MT, down from 2,713 yuan ($427) per MT the previous week.
Algeria will reduce its grain imports by 25% to 26% in 2021-22 it produces 27 million to 30 million quintals (2.7 MMT to 3.0 MMT), as expected, state news agency APS quoted the agriculture minister as saying.
CORN: March corn futures overnight hit $6.19 1/2, the contract’s highest intraday price since $6.25 on June 11, before fading. The contract gained 20 cents last week on South America weather concern and signs of strengthening exports.
SOYBEANS: March soybeans fell as low as $14.01 1/4 overnight after gaining 44 1/2 cents last week. The market may face corrective, profit-taking pressure after closing at seven-month highs last week and trade will closely watch for fresh export business and the South American weather outlook.
LIVESTOCK CALLS
CATTLE: Steady-weaker
HOGS: Steady-mixed
CATTLE: Deferred live cattle futures may face pressure from indications of increasing supplies conveyed in USDA’s Cattle on Feed Report Friday. Feedlot placements during December were estimated at 1.963 million head, up 6.5% from the same month in 2020 and above expectations for an increase closer to 2.6%. Feedlot inventories as of Jan. 1 rose 0.6% to an estimated 12.04 million head, contrary to expectations for a 0.2% decline. Price declines may be limited by wholesale beef strength and signs of firming cash. Live steers last week averaged $137.39, up about 78 cents from last week's average. Choice cutout values fell 57 cents to an average of $292.41, still up $8.10 from the end of the previous week and near a four-month high. April live cattle fell $1.075 Friday to $142.10, down 2.5 cents for the week. March feeder cattle fell $1.65 to $163.30, near a four-week low.
USDA’s Cold Storage Report after today’s close will detail meat stocks in frozen storage as of Dec. 31. The five-year average is an 8.8-million-lb. build in beef stocks and a 12.8-million-lb. decline in pork stocks during December.
HOGS: Nearby hog futures ended Friday at the highest levels since mid-October and strong momentum from last week’s rally may boost the market early this week. The CME lean hog index is up 72 cents today to $77.51. But February hogs are trading at an $8.69 premium to the cash index and deferred contracts are overbought, which could trigger corrective trade. Prices may also receive a boost from expectations meatpackers will soon recover from Covid-related slowdowns and boost slaughter back to normal levels. Slaughter last week was an estimated 2.44 million head, up 3.0% from last week but 10% under year-ago levels. Pork cutout values ended last week at $93.29, up from $89.07 at the end of the previous week. Movement was relatively light at about 243 loads. April lean hogs rose 95 cents Friday to $94.95, up $6.50 for the week and a lifetime-high close for the most-active contract.
