TFM Sunrise Update 01-10-2022


Corn futures were unchanged overnight with March at 6.06-3/4. and Dec at 5.57-3/4 as the trade settles in for the big January Crop report on Wednesday. Overnight, the dollar was up 20 points, crude weaker and stock index futures steady.  USDA will revise the U.S. 2021 corn crop, estimate U.S. Dec 1 corn stocks, U.S. 2021/22 corn carryout and World 2021/22 corn ending stocks.  Survey results show 2021/22 corn yield at 177.1 bushels per acre versus 177 last month.  The range is 176 to 178.5.  Our official estimate is 178.  Total U.S. Production’s average estimate is 15.078 bil bu.  First, we’ll get Weekly Export Inspections later this morning.  Argentina’s major agriculture areas will face intense and prolonged heat coupled with little or no rain through Jan. 12, fueling concerns over corn and soybean crops, according to a report from Buenos Aires Grain Exchange.  The whole Pampas growing belt will be completely dry in the period, while temperatures are seen above 100 degrees Fahrenheit (38 Celsius).  Crop stress currently reaching 40% of the nation’s grain belt will expand to about 75% next week, Commodity Weather Group said in a report.


Soybean futures were down overnight.  March beans traded both sides of $14 and are 3-1/4 cents lower to 14.07 this morning.  Nov beans are down 7-1/2 cents to 13.14-1/4.  Meal contracts are down $1.00/ton to 4.20 (March); and, soyoil is firm.  There was talk Friday that Index funds may have started to rebalance positions today by buying soybeans and soymeal.  March meal has traded above 420 on rising concerns of a lower Argentina soybean crop that could increase demand for U.S. soymeal.  USDA estimates World 2021/22 soymeal exports at 71 mmt.  Of the total, Argentina is 29, Brazil is 17 and U.S. is 13.  Trade estimates for Wednesday’s Jan Crop Report 2021/22 bean production is 51.3 BPA and a 4.434 bil bu crop versus 51.2 and 4.425 (Dec), respectively.  Our estimate is 51.3 BPA.  Members of Coopavel, one of Brazil’s largest oilseeds and grains cooperatives, expect to harvest 50% less soybeans than initially forecast due to the severe drought that hit Parana state in November and December, says Dilvo Grolli, president of the group, adding “We haven’t seen a loss like this in at least 20 years.”    They are scheduled to start buying today.  Overnight, Chinese May bean futures were down 51 yuan; Soymeal up 13; Soyoil up 22; Palm oil unchanged; Corn up 15.  Malaysian palm oil prices overnight were up 36 ringgit (+0.72%) at 5029.


The wheat complex was mixed overnight and down slightly this morning amid a stronger dollar.  March CBOT futures are down 3 to 7.55-1/2.  March KC is down 6 cents to 7.69-1/4.  March MPLS wheat is down a dime to 9.13-1/4.  This week, USDA will issue its first estimate of US 2022 winter wheat acres, estimate U.S. Dec 1 wheat stocks, US 2021/22 wheat carryout and World 2021/22 wheat end stocks. Trade estimates the U.S. 2022 winter wheat acres at 34.2 mil vs 33.6 last year.  The trade also estimates Dec 1 wheat stocks at 1.421 bil bu vs 1.780 last year.  Trade estimates for U.S. 2021/22 wheat carryout is near 608 mil bu vs 598.  Finally, World wheat stocks are estimated near 278.6 mmt vs 278.2 previously. There is some talk that the agency could lower U.S. wheat exports and raise the US 2021/22 carryout.  The key to long term prices remains 2022 north hemisphere weather.


Cattle futures are called steady to lower after finishing last week near the bottom of the trading range in Feb live cattle, and holding support under the market.  The weak price action on the weekly trade is concerning that additional downside may be in front of the market.  The tone to start the week next week may be very key for price direction.  Cash trade saw moderate trade in the North at mostly $138 to $140 live, and $220 dressed.  That is mostly steady to $2 softer than the previous week.  Light trade also developed in the South at $138 live, which was steady with the prior week.  The Choice cutout moved $3.30 higher last week, while Select increased by $2.41/cwt.  Following back-to-back short production weeks, more buyers were seeking to refill coolers which brought about higher prices.  The cattle market is still trending higher, but the weak price action has tested lower support levels as could leave the market susceptible to additional downside pressure.


Hog futures are called steady to lower after sellers jumped back into the market on demand concerns and technical selling.  This led the front month to steep losses.  The deferred contracts are still showing good strength, but saw profit taking on Friday.  Despite Friday’s lower closes, June and July hogs posted contract high closes on the weekly charts, and traded higher on the week.  February hogs failed to get through resistance over the harts at the $84.00 level and opens the door to more downside.  The cash hog market did not help the futures. Early week strength faded on Friday and direct trade and the cash index traded lower, weighing on the Feb futures.  The Lean Hog Index is still holding a 6.080 discount to the futures.  Whether it is tighter hog numbers or concerns regarding COVID slowing the packing line, slaughter pace was estimated at 463,000 head for Friday, down 2,000 from Thursday.  Estimated slaughter for the week is 2.316 million head, which is down 129,000 from last year.  Pork carcasses aided the selling pressure losing 5.09 at midday, but closed the session lower, losing 3.66 to 85.90, on a moderate load count of 392 loads.


Matthew Strelow

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