This Week in Commodities 01-07-2022

Corn slightly higher to start 2022

March corn futures added 13-1/2 cents this week to close at 606-3/4. December of 2022 corn futures added 11-1/2 cents this week to close at 557-1/2. Slow export sales and falling wheat prices stymied upside potential in corn this week even as soybean futures ran higher. Momentum studies have turned lower in the last two weeks but remain at rather high levels given corns price action in the last three months.

For the USDA Supply and Demand report next Wednesday, traders see corn ending stocks near 1.48 billion bushels as compared with 1.49 billion in the December update. 2021 corn production is expected to come in near 15.08 billion bushels as compared with 15.06 billion in the December update. Grain stocks as of December 1 are expected near 11.6 billion, if realized this would be a three-year high in the December 1 stocks number.

Soybeans higher this week ahead of January WASDE report

March soybean futures added 71 cents to close at 1410-1/4. New crop November 2022 soybean futures added 49-3/4 cents this week to close at 1319 a new contract high. Private estimates making cuts to Brazil’s soybean crop by as much as 13 million tons spurred soybean futures higher this week. Poor soybean export sales this week were trumped by South American weather. The next seven days look rather hot and dry for much of Southern Brazil and Argentina, but the week following, rains are expected according to some weather models. Some feel these rains will be too little too late to save much of the drought-stressed crops, others see the potential rains as highly beneficial and crop saving in some areas.

For the January USDA Supply and Demand update, traders see soybean ending stocks at 353 million bushels as compared with 340 million bushels in the December update. Traders see soybean production at 4.4 billion bushels as compared with 4.4 billion bushels in the December report. World soybean ending stocks are expected near 99.7 million tons as compared with 102 million in last month’s update. For the December 1 stocks report, traders see soybean stocks near 3.13 billion bushels as compared with 2.95 billion last year.

 

Wheats lower this week

March CBOT wheat futures shed 12-1/4 cents this week to close at 758-1/2. March KC wheat futures shed 26-1/2 cents this week to close at 775. March spring wheat futures shed 59-1/4 cents to close at 922-3/4. Long liquidation struck the wheat markets this week as all three wheats faced double-digit losses. For the US 2022 winter wheat seedings report, traders see all winter wheat planted areas at 34.3 million acres as compared with 33.6 million acres for the 2021 season. For the USDA Supply/Demand report, traders see wheat ending stocks at 609 million bushels as compared with 598 million bushels in the December update. Poor exports are much to blame for the expected additions to US wheat-ending stocks.

 

Two-Sided Day Ends Wild Week

Despite ending the week with 92 cents of losses in Thursday and Friday’s trade, the February Class III price was still 71 cents higher on the week with a close at $21.43. The roll from January to February as the second month got the charts over that pesky $20.00 resistance level and opens up the topside for further strength. The block/barrel average also managed to break out of its range to the topside in the last week as well, hitting a 14-month high at $1.96875/lb and finishing the week at $1.93/lb. This week’s Dairy Products report showed cheddar production down 4.4% year-over-year, but total cheese production up 1.6%. Whey production remains below the 5-year average as spot prices sit at all-time highs, hitting $0.7575/lb today.

Class IV action was strong again this week with the February contract closing at $22.13. Spot butter prices have been ripping higher, closing the week out at $2.7425/lb. That was a 29 cent jump on the week and makes for a 65-cent rally within the last three weeks, hitting its highest level since December 2015. Both the supply and demand situations are trending bullish as US butter production was down 10% year-over-year in the month of November and exports managed another huge month. Spot powder was also higher on the week, jumping to $1.71/lb and finding support from a 15% decrease in production in November vs. the same month a year prior. Class IV futures have still hardly even shown signs of retracement and continue to push near their 2014 all-time highs.

Author

Keegan Madigan

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