TFM Daily Market Summary 01-11-2022


The cash cattle market is running at historically high levels for this time period.  Supported by good demand and strong retail values, cash cattle averaged near the $140 level a couple weeks ago, softened $1-2 lower last week, and early indications are seeing $1 lower trade this week near $137.  This is still very strong compared to the price levels of the past two years.  There is some reason for concern in the market as Omicron variant of COVID has been impacting the packing plants, slowing the slaughter chain.  This, if prolonged, could lead to a period of cattle backing up, pressuring the ash and futures market.  Those pressures could likely push retail values higher, as tighter supply on beef production runs into a strong demand tone.  The next few weeks could have a lot of volatility as the market is trying balance out the many different forces acting upon it.

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CORN HIGHLIGHTS: Corn futures ended the session quietly in front tomorrow’s USDA WASDE report along with Quarterly Stocks. March gained 1-1/4 cents to close at 6.01 and December up 0-1/2 cents to end the session at 5.57-1/2. Tomorrow’s reports will give the market a whole new set of numbers to set the base for price direction. South American weather is at a point where either the crops improve, or they don’t.

Tomorrow should confirm the second largest corn crop on record at 15.069 billion bushels. Yield should be close to 177.1 bushels per acre, the same figure as in November. We would not be surprised to see a decline in exports and an increase in crush for ethanol. In the end the carryout number remains mostly unchanged near1.484 bb. World numbers may have more impact as the South American crop could be downgraded tomorrow although we believe it’s too early in the season for the USDA to make significant changes. Quarterly stocks might suggest a lighter feeding rate due to a mostly mild winter so far.


SOYBEAN HIGHLIGHTS: Soybean futures traded in about a 20-cent range yet finished steady to 2 cents firmer. March gained 2 to close at 13.76-3/4 and November up1-3/4 to13.86-1/2. Mixed forecasts for South America and position squaring in front of tomorrows WASDE and Stocks report was a feature in today’s trade.

The spotlight for price direction will be the tomorrow’s reports and then immediately after, weather in the southern hemisphere. Continuous above normal temperatures in north Argentina and southern Brazil suggests crop ratings could continue to decline where 29% is rated as good and 30% bad in Parana. Don’t expect significant drawdown to production on this report as most of the data was likely gathered before the end of December. Private forecasts continue to chip away at the totality of weather problems with many suggesting the total Brazilian soybean crop is closer to 134 million metric tons versus 144 million from the USDA last month. Today, Conab, the Brazilian equivalent to the USDA estimated the crop size at 140.5 mmt verses last month’s 142.9. Last year was a record crop at 138 mmt. Most private analysts are suggesting near 134 mmt due to recent heat and lack of moisture.


WHEAT HIGHLIGHTS: Wheat futures had a positive close for all three classes, correcting from an oversold situation. March Chi gained 8-1/4 cents, closing at 7.70-1/4 and July up 9 at 7.69-1/4. March KC gained 13-1/2 cents, closing at 7.91-3/4 and July up 11 at 7.89. Continuous lack of moisture and snow cover are also reasonable reasons why futures may be considered undervalued.

Tomorrow we get not only the WASDE report but will get the first estimates of US winter wheat planted acreage. Expectations are for a half million acre increase to 34.1 million acres. On the WASDE, expectations are for a reduction in exports (due to the poor results on that front) and therefore and increase in carryout. Estimates peg the increase around 12 mb. The market still awaits results of the Iraqi tender which is for 500,000 mt and US HRW wheat could be on the docket. Bearish to the market are the Argentinian and Australian crops, which are forecasted to be record large. Here in the US, drought conditions remain a bullish factor for the southern plains. In general, the wheat market seems to be correcting from a very oversold situation, but US futures are not alone. Paris milling wheat futures also saw a turnaround today from being oversold.


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John Heinberg

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