Today is the last trading session of the week.
Grain futures are mixed after of firm overnight session. Today is the last full day of trading before closing for tomorrow’s Christmas holiday weekend. World financial markets and crude oil and metals are higher, as omicron variant infection is commonly understood as only creating mild illness. Omicron has not quickly displaced Delta in the US and worldwide as the current Covert-19 flu.
South American weather is the focus and will create a volatile Sunday night session. The 10-15 day forecast for Brazil and Argentina will be closely scrutinized, looking for any rain to enter that area in early January 2022. Hints of rain will create weakness, but many fund managers will be looking to buy breaks in price. The next crop report is January 12, when the USDA will issue the final 2021 production data for last year’s crop (which will be adjusted several times in the coming two years) and will likely be slow to react to Brazil and Argentina production data.
The Brazilian state of Parana’s Department of Rural Economy lowered it's soybean production by 2.54 MMT’s, or 12% of the previous month’s estimate. The latest assessment of 18.4 MMT’s is down 1.3 MMT’s or 7% from a year ago. Rain forecasted in the next two weeks will determine if yields can recover or further decline. The first Brazilian corn and soybean crops are in their reproductive stages of pollination and pod filling into the new year. Over 50 MMT’s soybeans and 24 MMT’s of first crop corn are anticipated to be produced in the southern third of Brazil. Yield with losses of 20% accounts for 10 MMT of soybeans and 5 MMT of corn at risk. This shows the heightened concern for moisture to arrive in the next two weeks, or row crop prices will move materially higher.
On Wednesday, South American weather experienced light showers of .1- .6” fell across far NW Argentina and Paraguay. The remainder of Brazil and Argentina was dry with hot temperatures. Temperatures range from the 80s to the lower 100s. Widely scattered showers persist across the northern half of Brazil, where moisture has been excessive over the last month, with accumulations of .25-1.5”. Northern Brazilian crops could use a drying period with harvest to start in this area in 2-3 weeks. In the US, the central Plains have not seen rain in December. This is concerning with the blowout event on the wheat crop in areas of Kansas and Nebraska that need rain to cover the roots.
Cattle futures finished higher yesterday, with the cash trade for Wednesday slow and liked. Small numbers again move in the southern plains at $135, which was steady with earlier in the week and $1-2 lower from last week. Dressed trade in Nebraska was steady to $1 lower from last week at $217-218. Yesterday’s Cold Storage report showed end of November be stocks were 104% of October and 96% of last year. This was the fourth consecutive increase, with total be stocks reaching a nine-month high of 493 mill pounds. The USDA Cattle on Feed report and Hog and Pig’s report are out after the close today.