GRAIN OUTLOOK
GENERAL COMMENTS: Grain and livestock markets reopen at 8:30 a.m. CT following the extended holiday weekend. Malaysian palm oil futures rallied over 7% and neared a three-week high after China said it would further ease border controls for inbound travelers. Front-month crude oil futures are about 50 cents higher. U.S. stock index futures signal a mixed open, while the U.S. dollar index is slightly lower this morning.
USDA reported a daily sale of 177,500 MT of corn for delivery to Japan, 7,500 MT for delivery during the 2022-23 marketing year and 170,000 MT for delivery during the 2023-24 marketing year.
President Vladimir Putin said Russia was ready to negotiate with all parties involved in the war in Ukraine, but that Kyiv and its Western backers had refused to engage in talks. Putin also signaled Moscow remains committed to the war, saying the Russian population is prepared to endure a protracted conflict. Both U.S. and Ukrainian officials believe Russia is not serious about negotiations and suspect the claim is a ploy to buy time amid Russian fallbacks on the battlefield.
Argentina’s central crop areas were dry during the holiday weekend while some significant rain fell in central through southeastern Buenos Aires and in far northwest areas of the country. World Weather Inc. says Argentina will not likely see much precipitation until this weekend and early next week, then another period of drying is expected. Brazil is expected to see routine rainfall later this week.
South American crop consultant Dr. Michael Cordonnier cut his Argentine soybean crop estimate for a fifth consecutive week as approximately 40% of the country’s soybean acreage is still unplanted. His Argentine soybean crop forecast now stands at 43 MMT, down 2 MMT from last week. Cordonnier cut his Argentine corn crop estimate by 1 MMT to 46 MMT, noting there is still 45% of corn acreage left to plant. He trimmed his Brazilian corn crop estimate by 500,000 MT to 125 MMT, noting drought problems in Rio Grande do Sul, the country’s largest first corn crop state. He left his Brazilian soybean crop estimate at 151 MMT.
China will stop requiring inbound travelers to go into quarantine starting from Jan. 8, the National Health Commission said on Monday. China’s management of Covid-19 will also be downgraded to the less strict Category B from the current top-level Category A, the health authority said, as the disease has become less virulent and will gradually evolve into a common respiratory infection. Chinese officials estimate about 18% of the population were infected with Covid-19 in the first 20 days of December.
Russian wheat prices fell last week following a weaker ruble and high domestic supply amid a record crop, analysts said Monday, adding that the pace of sea shipping had picked up after storms. Prices for Russian wheat with 12.5% protein content and for supply from Black Sea ports in January were at $307 per MT free on board (FOB) on Friday, down $5 from a week earlier, the IKAR agriculture consultancy said in a note. Russian grain exports rose to 1.1 MMT last week from 840,000 MT the previous week as Black Sea weather improved after storms, another consultancy Sovecon said.
Indonesia plans to set the crude palm oil reference price for Jan. 1 to Jan. 15 at $858.96 per MT, deputy coordinating minister of economic affairs Musdhalifah Machmud told Reuters. The reference price would put the export tax for that period at $52 per MT and the export levy at $90 per MT, unchanged from current levels. The reference price for Dec. 16 to Dec. 31 is $871.99.
Egypt tendered to buy up to 60,000 MT of wheat from unspecified origins as part of a World Bank-funded food security program. South Korea tendered to buy 25,000 MT of optional origin GMO-free, food-quality soybeans.
CORN: March corn futures rose 5 3/4 cents Friday to $6.66 1/4, the contract’s highest close since $6.67 on Nov. 30 and a gain of 13 1/4 cents for the week. The market’s technicals have strengthened as prices extended a two-week uptrend. Initial resistance comes in at Friday’s high of $6.67 3/4, followed by the 50- and 100-day moving average, which converge around $6.69.
SOYBEANS: March soybeans rose 12 1/2 cents Friday to $14.84 1/4, a gain of 3/4 cent for the week. The market may be poised for continued low-volume, sideways price action this week, with support from recent export business offset by an outlook for record Brazilian production. Dryness in Argentina remains price-supportive.
WHEAT: March SRW wheat rose 13 3/4 cents Friday to $7.76, the contract’s highest close since Dec. 1 and a gain of 22 1/2 cents for the week. Winter wheat may extend a recent rally amid strengthening technicals and beliefs that market established a near-term price bottom earlier this month.
LIVESTOCK CALLS
CATTLE: Steady-mixed
HOGS: Steady-firm
CATTLE: Live cattle futures may gain support on followthrough from last week’s gains and expectations for further firmness in the cash market, though slightly bearish numbers in USDA’s Cattle on Feed Report last Friday may limit upside. The nation’s feedlot inventory as of Dec. 1 totaled 11.673 million head, down 312,000 head (2.6%) from year-ago but 24,000 head more than the average pre-report estimate implied. November placements dropped 42,000 head (2.1%), contrary to expectations for a 4.2% decline. November marketings were slightly stronger than anticipated at 1.2% above year-ago. Placements declined in eight of 11 months so far in 2022 as the industry extended its contraction.
Cash trade this week will likely be slow to develop amid holiday-reduced slaughter schedules, but prices should retain a firm tone. USDA-reported live steers averaged $155.90 last week through Friday morning, up 21 cents from last week’s average. Wholesale beef extended a recent rally, with Choice cutout values up $6.74 Friday to $271.95, up $9.12 from the end of the previous week and the highest daily average since July 19. But movement was light at 73 loads.
February live cattle rose 45 cents Friday to $157.75, up $1.975 for the week and a lifetime-high close for the contract.
HOGS: Lean hog futures may gain followthrough support from last week’s gain and supportive numbers in USDA’s quarterly Hogs & Pigs Report Friday, which carried signs the industry’s contraction phase is ending. USDA estimated the Dec. 1 hog herd at 73.119 million head, down 1.327 million head (1.8%) from year-ago and 210,000 head less than the average pre-report estimate implied. The market hog inventory at 68.321 million head declined 2.0%, while the breeding herd at 6.154 million head rose 0.5% from last year. The data should be supportive for winter-, spring and early-summer lean hog futures. Far-deferred contracts could face mild pressure with the data implying the herd contraction phase may be coming to an end.
Strength in wholesale pork may also support futures. Pork cutout values rose $3.30 Friday to a five-week high of $92.06, driven by a jump of over $15 in bellies. But movement was light at 208 loads. February lean hog futures tumbled $1.225 Friday to $87.825 but still gained $2.05 for the week.