CORN
Corn futures traded down 8 cents overnight to 5.74 in the March contract as that contract assumes the brunt of the open interest in this market. Today marks First Notice Day for the nearby December contract forcing the majority of long position holders to roll their positions out of that contract or risk the possibility of delivery. March futures are basically unchanged for the month which included the highest close for the contract last week since July 1. The dollar plummeted overnight, and crude is down 2.00/bbl along with a 450 basis point drop in stock index futures to six-week lows as the Omicron strain of the Covid virus zaps the markets and trader confidence. Favorable conditions for corn planting and establishment is being reported in central Brazil, while dryness over southern Brazil is causing some stress. Recent showers are seen benefiting corn planting and establishment in Argentina, but dryness will become a concern shortly.
SOYBEANS
The soy complex is lower this morning with Jan beans down 12 cents to a two-week low of 12.29-1/2. Friday’s sharply lower trade left gaps on the daily charts that technical traders filled during yesterday’s session, allowing for a follow-through move lower despite a big reversal in the U.S. currency bringing a screeching halt to the rally. Jan beans are down 20 cents for the month and are now trading below all their Moving Averages. Bearish traders could be targeting a move down to the Nov 9 low of 11.81-1/4. Since trading at a four-month high on Nov 17, Jan meal, down $3 per ton this morning to 344.70, is on the verge of closing lower for a sixth straight day. Malaysian palm oil prices overnight were down 185 ringgit (-3.81%) at 4672 seeing the biggest daily loss since the middle of September on concerns that the omicron variant may shutter cities and borders once more and curb demand for the world’s most-consumed cooking oil. Chinese Soybean futures were down 17 yuan; Soymeal up 15; Soyoil down 194; Palm oil down 180; Corn up 3. The U.S. soybean crush in October likely jumped to a nine-month high of 5.868 million short tons, or 195.6 mil bushels, according to the average forecast of nine analysts surveyed by Reuters ahead of tomorrow’s monthly USDA fats and oils report.
WHEAT
Winter wheat futures are posting double-digit losses this morning with the March CBOT contract off 12-1/2 cents to 8.09-3/4, and March KC down 17 to 8.40-1/4. This is 65 cents and more than 50 cents off of last week’s contract highs, respectively. March MPLS wheat is down a dime to 10.35-1/4. Arguably, prices were susceptible for a technical pullback after such a strong move to the upside, so when Covid news shook up the marketplace and the dollar strength continued, nearby topping action was not a total surprise. The 60 point drop in the dollar overnight may be helping slow the price drop in grains. Despite recently advertised weather issues in Australia, growers there are on course to harvest a record 34.4 million tons of wheat this season, the country’s chief commodity forecaster said, as it raised its official estimate for the 2021/22 crop. The expected crop would be 3% above a previous record volume in 2020/21, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) said. ABARES had in September forecast the new crop would be the second-largest on record after 2020/21.
CATTLE
Cattle futures are called steady to lower on follow-through from reversing off early session highs on Monday and closing lower. February cattle futures posted a new contract high to start the session, only to reverse off the gains to finish more than $2.00 off the highs. These technical reversals were noticeable on deferred contracts, and the weakened technical signal opens the door for additional downside pressure as the week progresses. The seasonality makes the market cautious and the latest price action may have signaled a near-term top. The cattle market may be reacting to the news regarding the Omicron strain of COVID and potential longer-term demand concerns. The cash market was quiet to start the week, typical for a Monday, as bid and asks are not defined. Feeder cattle saw selling pressure as well, despite a weak price action in grain markets. Jan feeders are running a strong premium to the cash index.
HOGS
Hogs are called weaker as the cash market keeps pressure on the front end of the market. Deferred contracts reflect longer-term market optimism, as prices traded with triple digit gains causing a heavily bear-spread market condition. The strength in long-term contracts reflect the views of traders about the optimistic look going into 2022. The market is building some good values, and that strength can support the front end of the market. For now, Dec hog futures are challenging the contract lows after prices broke apart technically on Friday. The $72.00 area is a support floor, but the lack of a supportive cash market will keep selling prevalent. Post-holiday cash market is a concern, as the market works through backed up hog supplies. The Lean Hog Cash Index was softer losing .93 to 71.63. Dec hog futures have moved into a premium over the index, which could limit gains in the front month. Carcass values were higher at midday, as retail pork gaining 7.50, and held a portion of those gains at the close, finishing 3.73 higher to 87.71. The load count was moderate at 335 loads.
Author
Matthew Strelow