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Today’s Prices
Corn and soybeans closed higher today as the South American weather forecast still looks somewhat threatening. Wheat was lower much on spreading between corn and wheat.
Grain Market News
Corn – Weekly Export Inspections
Cornn export inspections last week at 28.3 mb. That’s the lowest in about 6 or 7 weeks and well below the year ago level. We are expecting a significant increase in export inspections as we move through the winter but today’s number was somewhat disappointing.
Soybean – Weekly Export Inspections
Soybean export inspections were down from last week as we continue to fall seasonally. This is not unusual, in fact, we expect export inspections to be drifting lower all the way through the South American harvest and when the begin to ship more heavily out of Brazil in Feb, Mar, and April.
Wheat – Weekly Export Inspections
Wheat export inspections were up just a little bit from last week but still somewhat disappointing at 9.97 mb. That is only half the level needed to reach USDA’s export forecast. We will need to see export inspections improving to 18 mb as we move through the winter months. If we cannot achieve those totals than USDA will be forced to lower its export estimate.
Grain Market News
Covid Data
Global covid cases are exploding to the upside, near record large. The good news is that global deaths are still on a gradual decline and that is giving the outside and financial market a little bit of a sigh of relief that deaths are not exploding to the upside like cases, as the most recent variant Omicron does not appear to have as severe side effects and is not as deadly as previous variants. U.S. covid data also shows an explosion of new cases over the last 3-5 weeks. The good news, if there is such a thing when it comes to covid, the deaths have been about steady. That is unfortunate that deaths are not declining but the good news is that they are not increasing like the number of new cases.
Baltic Dry Index
This is the Baltic Dry Index which takes 23 shipping routes around the global and combines them into an index. This index pretty much tells us the what the value of freight is for moving grains and other bulk goods around the world. When the Baltic index was extremely high there was talk about buyers being somewhat reluctant due to having to book extremely high freight. But the freight rates have come down dramatically and therefore it does make grain a little bit cheaper to world buyers when it comes to booking their freight.
Hogs & Pigs Inventory
Hogs and pigs inventory came in down 4% from a year ago. That was somewhat friendly for hog prices but somewhat negative when it comes to feed demand. The trade believes that would be down about 3% so a little disappointing when it comes to feed demand from the hog industry.
All Hogs & Pigs – Dec 1st
When we look at all hogs and pigs inventory on Dec 1st going back about 25 years, we can see the record number of hogs and pigs in 2019 and 2020. This followed the devastation of the Chinese heard due to African Swine Fever and China had to buy pork all of the world to make sure they didn’t run out. The U.S. certainly benefited and now that African Swine Fever has pretty much passed and China’s hog herd is back to pre-African Swine Fever levels, the U.S. hog and pig numbers are down as we’ve lost that Chinese demand.
Cattle on Feed
Cattle on feed down just fractionally from last year, down just 0.4% from last year. That was fairly close to trade expectations so no big surprises in the cattle on feed numbers.
Cattle on Feed – Dec 1st
When we look at cattle on feed as of Dec 1st, as we mentioned cattle on feed was down 0.4% very last year but we’re still near record levels up around 12 mil head of cattle so still should see very good demand coming from the cattle sector.
Observed High Temps
Over the weekend temperatures were extremely hot in Argentina, Paraguay and that extended into Urugay and parts of southern Brazil as well. Temperatures in the mid to up 90’s, even 100’s and crop conditions are likely on the downtrend and crop production estimates likely to slip lower until significant or more soaking rains can be seen in southern Brazil and Argentina.
March Corn Chart
Corn prices shooting to new highs up to $6.15 on the Mar chart. We’ve taken out the highs from Nov, early Dec and clearly this market is in an uptrend. Technical indicators are very overbought but as long as weather in South America remains threatening it’ll be difficult for corn to see a major setback. How high corn prices can go will be a function of how long it stays warm and dry in southern Brazil and Argentina. But at least for right now the next target is $6.16, the highs posted back around the 4th of July, and then $6.33 and $6.40 would be the next targets if it remains dry in South America.
January Soybean Chart
Soybeans also exploded to the upside today making a new high for the move. We’ve taken out the sideways range that’s been in place for quite some time. This market is clearly in an uptrend based on threatening South American weather and crop estimates on the downswing. Similar to corn, where technical indicators are severally overbought but as long as weather remains threatening any corrections will be relatively brief. If the weather would change then we could have a larger pullback and a more sustained pullback but right now weather appears to be threatening for much of southern Brazil and Argentina.
March KC Wheat Chart
The wheat market had a reversal today, in fact, a key reversal making a new high for the move and closing lower on the day. That was enough to hook the technical indicators to the downside so it was a very negative day from a chart and technical perspective. But if corn and beans remain supportive on threatening South American weather, wheat is not going to continue to trade lower and therefore we would not be a seller of wheat unless corn and beans look like they’re topping out as well.
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