Market Snapshot | January 7, 2022

Corn futures are slightly higher at midmorning after rebounding from overnight declines.

• Corn futures firmed in step with an upturn in the soybean and soymeal markets, though prices are holding in narrow ranges as traders await USDA’s final Crop Production Report Jan. 12.
• Reduced crop prospects from extended dryness in South America continues to provide underlying support.
• Paraguay and southern Brazil “will see little to no rain of significance through late next week,” World Weather Inc. said, “and with warm to hot temperatures returning next week, the region will see steady increases in crop stress and declining yield potentials.”
• USDA reported a daily sale of 176,784 MT of corn to Mexico in the current marketing year.
• March corn fell as low as $5.99 overnight before recovering and is on track for a higher weekly close after ending last week at $5.93 1/4. 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.

Soybean and soymeal futures are up sharply after breaking above chart resistance, while soyoil is lower.

• March soybean futures recovered from overnight weakness and pushed above chart resistance to trade above $14.00 for the first time since mid-June. March soymeal surged to a contract high above $425.00.
• Concern over South American crop shortfalls and signs of renewed export demand supported prices.
• USDA reported a daily sale of 120,000 MT of soybeans to “unknown destinations” for the 2022-23 marketing year. Today’s report follows USDA sales announcements the previous two days for a combined 234,000 MT soybeans for delivery to Mexico and unknown destinations in 2022-23.
• Forecasts signal Argentina will be hot and dry into mid-January, increasing stress on the soybean crops. That is fueling gains in soybeans and soymeal.
• Paraguay and southern Brazil may see a weather pattern shift starting Jan. 14-15 that may boost rainfall chances, World Weather said. However, “confidence is low” the pattern will bring significant rain.
• “Soaking rain is not expected in many locations and if a drier weather pattern returns soon the soil is likely to dry out again and crop stress should soon ramp up,” the forecaster said.
• March soybeans broke resistance around the previous weekly high at $13.99 and climbed as high as $14.06 1/2, the contract’s highest intraday price since June 11.

Wheat futures are mostly lower, led by declines of mostly 10 to 12 cents in spring wheat.

• Winter wheat futures extended a two-week slide as deteriorating technical and poor export demand pushed prices since mid-October. But losses have been pared at midmorning with the upturn in soybeans and corn.
• 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 as low as $9.05 ¾, down from $9.82 at the end of last week and the lowest price since Oct. 1.

Live cattle and feeder cattle futures are lower.

• Live cattle futures are heading for weekly decline amid softer cash markets and slower slaughter rates.
• Feeder cattle are being pressured by strength in corn.
• 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.
• Support in February live cattle is seen at this week’s low at $136.375 and the 100-day moving average around $136.20. A drop under those levels may have bears targeting the December low at $135.50.

Lean hog futures are mostly lower, with nearby February leading declines.

• Nearby lean hogs tumbled in a corrective selloff from gains yesterday. Futures’ unusually large premium over the CME lean hog index is pressuring the February contract.
• The CME lean hog index fell 30 cents to $73.57 but remains near the highest levels since mid-November.
• 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.
• 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.
• February lean hog futures fell as low as $80.65, down from $81.475 at the end of last week.