Market Snapshot | December 7, 2022

Corn futures are 2 to 4 cents higher in at midsession.

• Corn futures are posting modest gains after rebounding from a drop to 3 1/2-lows overnight, supported by corrective buying and spillover strength from wheat.
• China announced today the most sweeping changes to its zero-Covid policy since the pandemic began three years ago. China’s national health authority said asymptomatic Covid cases and people with mild symptoms can quarantine at home. China also dropped testing for people travelling within the country.
• U.S. ethanol production averaged 1.077 million barrels per day (bpd) during the week ended Dec. 2, up 59,000 bpd from the previous week but down 1.2% from the same week in 2021, according to the Energy Information Administration. Ethanol stocks increased 323,000 barrels to 23.257 million barrels.
• South Korea purchased 65,000 MT of corn expected to be sourced from South America or South Africa and 65,000 MT of optional origin non-GMO soybeans.
• March corn overnight edged under Tuesday’s low to $6.35, the contract’s lowest intraday price since $6.21 3/4 on Aug. 22. The market remains technically weakened and may need to climb back above near-term resistance levels, including the 10-day moving average at $6.56 3/4, to spark fresh buying.

Soybeans are 2 to 4 cents higher and January soymeal is nearly $2 higher, while January soyoil is down about 30 points.

• Soybean futures extended Tuesday’s gains as recent China purchases fueled demand optimism and continued dryness in Argentina stirred concern over reduced yield potential.
• High temperatures in Argentina Tuesday reached the 90s into the 100s Fahrenheit. Rain expected this weekend “will be extremely important for crops due to the following week of weather expected to trend dry and warm once again,” World Weather Inc. said.
• Argentina’s bottom line “will remain one of concern,” World Weather added. “The previously wettest areas of southwestern Argentina will experience the poorest distribution of rain in this next 10 days and the ground will firm up with crop stress evolving once again.”
• Net drying in southern Brazil is expected to continue into the weekend, but some showers are expected, including during the early part of next week. Rio Grande do Sul “has not been dry enough yet this season to threaten crop development, but this coming week of warmer and drier weather may change that,” World Weather said.
• Malaysian palm oil futures fell 3.1% after the European Union agreed on a new law to prevent companies from selling into its market commodities linked to deforestation.
• China imported 7.35 MMT of soybeans in November, up 77.5% from October but 14.2% less than last year. Logistics issues with U.S. soybean shipments out of the Gulf and China’s strict Covid restrictions slowed arrivals. Through the first 11 months of 2022, China imported 80.53 MMT of soybeans, down 8.1% from the same period last year.
• January soybeans rose as high as 14.70 but remained within the previous day’s range. Initial resistance is seen at Tuesday’s high of $14.72 1/2, followed by last week’s high of $14.78 1/2. January soymeal touched $454.80, a contract high for the second day in a row.

Wheat futures are higher, led by gains of 17 to 19 cents in SRW contracts.

• SRW wheat futures rose sharply on short covering and technically-driven buying following the market’s drop to 14-month lows earlier this week.
• Weak U.S. exports and stiff competition from other top wheat producers will limit price upside.  Consultancy Sovecon raised its forecast for Russia's 2022-23 July-June wheat exports to 43.9 MMT from 43.7 MMT, citing due active shipments.
• China will auction another 40,000 MT of state-owned wheat reserves on Dec. 14.
• Taiwan bought 42,750 MT of U.S. milling wheat and 65,000 MT of Brazilian corn. Japan is seeking 70,000 MT of feed wheat and 40,000 MT of feed barley.
• March SRW wheat extended overnight gains and rose above Tuesday’s high, reaching $7.56 1/4. The contract remains technically weak after falling Tuesday to $7.23 1/2, the contract’s lowest intraday price since October 2021.

Live cattle and feeder cattle are lower at mid-morning.

• Live cattle futures extend Tuesday’s losses, hitting three-week lows on followthrough technical pressure and slumping in wholesale beef that’s raising demand concerns.
• Packers have slashed beef prices in efforts to keep product moving. Choice cutout values fell 66 cents Tuesday to $242.65, the lowest daily average since March 2021.
• Uncertainty over the cash market is also weighing on futures. Traders started the week anticipating firmer cash cattle prices, but the futures selloff could undercut bullish expectations. Followthrough selling today may prompt hedged feedlots to move cattle at steady/weaker prices.
• China imported 670,000 MT of meat during November, up 6.4% from October but 1.0% less than last year. Through the first 11 months of this year, China imported 6.7 MMT of meat, down 23.2% from the same period last year.
• February live cattle fell as low as $152.75, the contract’s lowest intraday price since Nov. 16.

Hog futures are modestly firmer.

• Lean hog futures briefly extended Tuesday sharp declines but generated little followthrough selling and had rebounded to corrective gains by midmorning.
• Signs of a bottom in cash prices are supporting futures. The CME lean hog index ended an extended price drop with a 15-cent gain to $82.94 today (as of Dec. 5). While this could signal a seasonal low, but the market must show further strength to confirm a bottom.
• Pork cutout values jumped $3.36 Tuesday to a two-week high at $89.82 on strong movement of 344 loads.
• February lean hogs dropped slightly under Tuesday’s low and fell as low as $86.45, the contract’s lowest intraday price since Dec. 1. Prices held support at the 50-day moving average around $86.45.