CORN
Corn futures were up overnight after a soft finish to 2021. Forecasts for some rains in South America combined with position-squaring before the end of the year may have helped weaken grain and oilseed markets, but money-flow looks to be making a comeback to start the new year. The threat of increased U.S. farmer selling cash in the New Year also offered resistance last week. Cash bids for corn rose at rail market terminals and river elevators in Ohio and Indiana on Friday, grain dealers said. March corn rebounded 10-1/4 cents to 6.03-1/2 last night. One year ago March corn was trading near 4.40. Last Tuesday, the 2021 contract hit a high of 6.17-3/4 which now stands as a bullish target. Dec corn rose 6-1/2 cents to 5.52-1/2. Without much improvement in South American weather forecasts where dry conditions threaten yields, look for active market movement. Near term, Brazil’s Rio Grande do Sul and Parana is expected to get isolated showers through tomorrow with temps near to above normal through. Mato Grosso, MGDS and southern Goias Forecast looks much the same, as well as Argentina’s Cordoba, Santa Fe, Northern Buenos Aires Forecast, La Pampa, and Southern Buenos Aires. Strength in crude and stock index futures are also helping prop-up Ag futures to start the new year despite a rise in the dollar. We’ll get Weekly Export Inspections this morning and dialogue surrounding the big upcoming January crop report scheduled for release by USDA on January 12. Last year, the agency dropped the U.S. corn crop 325 mil bu, lowering the U.S. carryout from 1.702 to 1.552 bil bu. Futures rallied 22 cents post report. Lower South American production numbers could help increase final U.S. exports.
SOYBEANS
Soybean futures gapped higher overnight while posting gains of 20-1/4 cents in the nearby Jan contract to 13.49. Nov beans rose 14-1/2 cents to 12.83-3/4. Jan meal was up 6.10/ton to 417.80, and soyoil gained $1.00 per contract. China’s markets are closed for Holiday. Malaysian palm oil prices overnight were up 160 ringgit (+3.41%) at 4857. There is thought that the USDA could drop soybean exports on the January 12th report. This year, USDA could raise the U.S. crop and lower exports which could push the carryout over 400. A year ago, the agency dropped the U.S. soybean crop 37 mil bu thus lowering U.S. carryout from 175 to only 140 mil bu. Futures rallied 70 cents post report. Meanwhile, weather forecasts were closely monitored over the weekend because Brazil and Argentina is expected to hold dry, but get some isolated moisture to start this week. According to the Brazilian Institute of Agricultural Economics, soybean harvest has started in Mato Grosso. This is 20 days ahead of the pace from last year.
WHEAT
Wheat futures were higher overnight led by KC and MPLS contracts. Wheat posted bearish reversals early last week and struggled to find buyers ever since. March KC was up as much as 15-1/2 cents, though overnight to 8.17. March Chicago wheat hit an overnight high of 7.73-1/4 on gains of 8-1/2 cents. March Spring wheat advanced 12 cents to 9.94. New bullish wheat news is lacking as northern hemisphere winter wheat is in dormancy and U.S. HRW areas are expected to receive some moisture. Prices had succumbed to year-end weakness and a stronger dollar continues to weigh on sentiment. USDA is widely expected to trim wheat exports on the Jan 12 crop report. A year ago, USDA raised U.S. wheat feed use. This dropped U.S. carryout from 863 to 836 mil bu. Futures rallied 34 cents post report. This year, USDA could lower U.S. export demand and could increase the carryout to near 900.
CATTLE
Cattle futures are called mixed. Softer than expected cash trade and lack of information from USDA kept markets in check where live cattle futures finished off the highs for the week, and failed to push to most recent contract highs, which could keep technical selling pressure in place to start the week. Most cash trade was $138 amid light volume due to the holiday. Expectations are for cash to stay steady to firmer this week with stronger packer interest to start the new year. Retail values were unreported on Friday due to the holiday, but prices were trending higher on the week, supporting the market and cash optimism.
HOGS
Hog futures are called steady to lower. The market finished mostly lower on quiet trade on Friday as the premium of the futures to the cash market triggered selling. The demand tone is cautious in the first quarter, which is typical weak for pork. Retail values were unreported on Friday due to the holiday, but pork carcass values trended mostly lower on the week, until a sharp recovery on Thursday. The cash hog market is trying to build a base. Direct cash trade was unreported on Friday, but the Lean Hog Index gained .38 on Friday to 72.20, steady overall on the week. February hogs hold nearly a $9.00 premium to the cash index, which will limit gains in the front end of the market. Hogs futures looked poised for a correction after failing to push through resistance over the of the Feb contract.
Author
Matthew Strelow