LEADING OFF: Having fallen to new multi-week lows each of the past two trading days, corn and soybeans were on the defensive again this morning with modest losses. Good export demand, particularly for corn, is underpinning the market while favorable South American conditions remain a negative factor. At the morning break, corn is down 1 to 2 cents, while soybeans are mixed. There were no “flash” export sales for either corn or soybeans this morning for the first time in a week.
Wheat is down 4 to 5 cents, with ongoing pressure from favorable crop prospects globally and ongoing discussions for a possible peace deal between Russia and Ukraine. Cotton futures are flat. Rice has made another 7-year low and is down slightly.
U.S. equity futures rose this morning following the release of October and November jobs data from the Labor Department. Non-Farm Payrolls dropped in October by 105,000 due mainly to deferred resignations of federal workers. November non-farm payrolls were however were up 64,000, better than expected. The unemployment rate was a bigger question mark this morning because there is no private sector substitute for that data. It rose to 4.6% in November, up from 4.4% in September and above the 4.5% that was on average expected. Initial reaction to the report is that it could make more Fed rate cuts in the new year more likely. Investors are also digesting a solid Retail Sales report for October that came in at 0.8%, better than the 0.4% that was expected.
The dollar index fell after the jobs report to a 2 ½-month low and is down 0.3%. Crude oil is down by a dollar and natural gas is also lower, while gold is mixed.
CORN: Futures yesterday posted their lowest closes since Nov. 25. March futures, now the nearby contract, also closed below the trend line off their August low. So, right now, the near-term chart picture is looking uncertain. March futures now have nearby chart support at $4.36 3/4 and $4.34 1/2, with support on the weekly corn futures continuation chart down at $4.26 1/4. March corn has nearby resistance at $4.41 1/4 and $4.47 1/4-$4.49.
Today was the first day since last Wednesday that USDA didn’t announce a flash export sale, as “unknown destinations” has been shopping. Robust export demand continues to be reflected in the lagging weekly export sales data, and in weekly export inspections.
SOYBEANS: With strong crops becoming the expectation out of Brazil and Argentina, soybean bulls need good demand news, and they haven’t received it in the past day. Along with no flash sales this morning, weekly export inspections yesterday were underwhelming and even the NOPA soybean crush, while still historically strong, was not as good as expected for November.
South American conditions in the next ten days to two weeks will be mostly favorable, although World Weather says “there are a few areas to monitor.” Southwestern Argentina is still in need of greater rainfall and this area will receive the least rain in the next seven days, although some rain should occur. The northern half of Argentina will likely receive significant rain in this upcoming weekend that could cause localized flooding.
WHEAT: While there is no “breakthrough” with Russia/Ukraine peace talks, the fact that talks are continuing is seen as a good sign that there is at least a desire for an end to the war on multiple side. That would add to the bearish story for wheat: increased export competition. Strong harvests in the southern hemisphere are affecting the outlook, and meanwhile there are few concerns right now in the northern hemisphere.
France AgriMer lowered its forecast for soft wheat exports to 7.6 MMT, down from 7.85 MMT last month, amid increased competition from Argentina. This would still be up sharply from 3.5 MMT in 2024-25, as exports plunged following a poor harvest. Meanwhile the agency raised its outlook for shipments within the EU modestly, to 7.39 MMT from 7.05 MMT previously.
In other export news, Jordan did not make any purchases in an international tender to buy 120,000 metric tons on milling wheat. A new tender is expected in the coming days and is expected to close on Dec. 23, with shipment for March and April.
LIVESTOCK: Live cattle futures settled higher Monday and posted bullish outside days up on support from expectations for firm cash trade this week amid prospects for tightening cattle supplies. A jump in Boxed Beef prices yesterday afternoon is supportive. February live cattle have nearby chart support at $228.80, and resistance $231.25-$231.78, with chart gap resistance remaining at $232.30-$233.43. April live cattle filled the upward gap left on their daily chart last Thursday and now have nearby chart support at $228.40, with nearby resistance at $230.65-$231.18, with chart gap resistance at $231.45-$232.75. Plains direct cash cattle markets stayed quiet Monday and we doubt significant trade will develop before Wednesday afternoon or Thursday. Meanwhile traders are looking ahead to Friday’s Cattle on Feed report, which is likely to show the Dec. 1 feedlot inventory more than 2% below a year earlier, with feedlot placements for November likely historically low again.
We’ve been hearing increasing incidences of PRRS virus outbreaks, which could potentially reduce market hog numbers next spring. The Swine Health Information center earlier this month reported that PRRSV positivity in the wean-to-market phase rose to 48.5%, the highest level since 2018.
China on Tuesday sharply reduced tariffs on EU pork imports worth over $2 billion in the final ruling of an anti-dumping investigation seen as a response to the bloc’s duties on Chinese electric vehicles, Reuters reported. China will impose tariffs of between 4.9% and 19.8% on pork imports from the bloc for a five-year period starting on Wednesday, well below the 15.6%-62.4% imposed in a preliminary ruling in September. Some from the European pork industry voiced relief at the decision though they said the tariffs would still hurt. The European Commission expressed concern, pledging to defend exporters.
