CORN
Corn futures were flat/weaker overnight. Look for choppy trade to continue until USDA comes out with the December WASDE report mid-session tomorrow. USDA estimates U.S. total 2021/22 corn production at 16.323 bil bu vs 16.055 last year. Total demand is estimated near 14.830 bil bu vs 14,819 last year. This suggests carryout near 1.493 bil bu vs 1,236 last year. The actual carryout could be closer to near 1.343 bil bu. We’ll get Weekly Ethanol Stats today. Production is seen higher than last week at 1.046 mil bbl/day with average stockpiles estimated at 20.431 mil bbl vs 20.301 mil a week ago. The big headline was that EPA estimated 2020 ethanol blend at 12.6 billion, 2021 blend 13.8 billion; And 2022 15.0 billion was as expected. There is talk that EPA may reject a significant number of small refinery waivers. USDA will announce $100 million for biofuel infrastructure aid. In outside markets, less concern about Omicron virus offered support to energies and equities to start the week. The dollar is down 20 points this morning.
SOYBEANS
Soybean futures were down 8 cents overnight to 12.50 (Jan). Meal and soyoil oil were also weaker. The expectation for a higher U.S. soybean carryout in Thursday’s supply and demand report are keeping market participants on edge. South American weather is ok, but southern Brazil and northeast Argentina are drying out. USDA estimates U.S. 2021/22 soybean supply near 4.696 bil bu vs 4.761 last year. Total demand is estimated near 4.356 bil bu vs 4,505 last year. This suggests carryout near 340 vs 256 last year. The agency could drop demand 100 mil bu and increase carryout to 440. Spot basis bids for soybeans and corn shipped by barge to the U.S. Gulf Coast were mostly firmer on Tuesday as exporters worked to attract fresh supplies and barge freight costs climbed, traders said. Overnight, Chinese May bean futures were down 65 yuan; Soymeal down 23; Soyoil down 56; Palm oil down 90; Corn up 20. Malaysian palm oil prices overnight were down 88 ringgit (-1.79%) at 4841.
WHEAT
Winter wheat futures fell 7 cents overnight to 8.01-1/2 in the Chicago March contract and 8.20-1/2 in KC. March MPLS wheat slipped 2 cents to 10.34-1/2. The contract did managed to breach 10.31 resistance setting up a challenge of next resistance near 10.50. The markets have consolidated over the past week on ideas that USDA may increase U.S. and World Ending Stocks tomorrow. One weather source looks for drier than normal U.S. spring plains weather which could lower the U.S. 2022 crop and carryout. USDA estimates the U.S. 2021/22 supply near 2.606 bil bu vs 2.957 last year. Total demand is estimated near 2.023 bil bu vs 2.111 last year. This suggests a carryout near 583 mil bu versus 845 last year. HRW carryout is 299 vs 428 last year, SRW 93 vs 85, HRS 127 vs 235 and white wheat 46 vs 70. The key will be U.S./World 2022/23 supply and demand. Some look at U.S. 2022 wheat crop near 2.080 bil bu and carryout near 940. Meanwhile, we’ll watch reaction to U.S. and Russia relations. Some feel there may have been limited progress on a troop buildup. Some sources now feel Russia could invade Ukraine either late December or early January.
CATTLE
Cattle futures are called steady lower as seasonal selling pressure holds the market in check. Technically, cattle charts are still in consolidation, posting a series of higher highs and lows, building a flag pattern. Cash prices may be limited by a softer demand tone for retail beef. Boxed beef values were lower at midday and the pressure continued into the close with Choice carcasses dropping 4.50 to 268.03 and Select was 2.17 to 255.68. The load count was light to moderate at 159 loads. Feeder cattle also posted moderate losses. Jan feeders are running a premium to the cash index, limiting rally potential. The Feeder Cash Index traded .53 to 160.96 on Tuesday. The overall weakness in cattle markets kept the buyers on the sidelines.(M
HOGS
Hogs are called steady to lower. Futures traded sharply lower again on Tuesday on technical selling, demand concerns and overall weak cash. Technically, hog futures saw sustained selling pressure as Feb hogs closed at their lowest level in more than a month. The futures market still holds a strong premium to the cash markets, which makes the market vulnerable to additional selling pressure, especially given the overall weakness in cash. Midday National direct cash prices were not reported due to submission issues. The Lean Hog Cash Index was slightly higher, gaining 0.25 to 70.78. Dec hogs are still holding a small premium of 1.2950 to the index, and Feb is still over 6.00 premium to the index, which could limit gains in the front months. Like direct hog prices, midday and closing carcass values were not reported due to packer submission issues, and the lack of data did not help the market in general. Pork cutout values have been choppy and pressured, which has helped pressure the market with further downside room to go.
Author
Matthew Strelow