USDA has issued its final rule implementing a contract library pilot program to improve transparency and competition in the cattle market. Any meatpacker with more than 5 percent of the annual national cattle supply must report marketing information at the end of each month. The data collected include cattle numbers, the purchase price and contract timelines. Information that would identify the farmer or rancher will not be included in those reports.

CORN

ANALYSIS

Corn closed the week $.09 1/2 higher. Last week, private exporters announced sales of 4.0 mb of corn to Mexico.

In the weekly export inspections report; U.S. corn exports, for the week ended 12/08/22, were 19.9 million bushels, falling from the previous week’s marketing year high 32.5 mil bu, but continuing to run well below the roughly 44.3 million bushels/week that will need to be averaged through the end of next August in order to reach the USDA’s just-lowered export projection of 2.075 billion bushels. With year ago exports this week of 36.6 mil bu, cumulative export inspections of 281 million bushels are now down 31 percent from last year’s 408 million.

In the weekly EIA report; U.S. ethanol production averaged 1,061k bpd vs 1,077k bpd the prior week and 1,087k bpd the previous year. U.S. ethanol stocks rose to eight-month high at 24.4 million barrels in the week ending Dec. 9, up from 23.3 million the previous week, and up from 20.9 million barrels in the same week last year.

STRATEGY & OUTLOOK

The market is telling producer to sell into a strong basis and look to re-own on weakness.

SOYBEANS

ANALYSIS

Soybeans closed the week $.03 1/2 lower. Last week, private exporters announced sales of 5.1 mb of soybeans to an unknown destination.

In the weekly export inspections report; U.S. soybean exports last week were 67.6 mil bu, down from the previous week’s 76.4 mil bu and comparable to last year’s same-week exports of 64.2 mil bu. Over the last eight weeks, soybean exports averaged 85.6 million bushels/week, slightly below last year’s 89.5 million/week average during the same period, while cumulative export inspections of 859 million bushels are down 8 percent from last year’s 938 million vs USDA’s 2.045 billion bushel export projection reflecting an estimated 5.2 percent decline for the year. Soybean export inspections will need to average roughly 29.9 million bushels/week through the end of August in order to reach the USDA’s export projection, identical to last year’s average weekly shipments from this point forward.

The NOPA crush report was disappointing at only 179.184 mb, below estimates of 181.5 mb, down from last month’s 184.5 mb and below last year’s 179.5 mb. The record November NOPA crush was 181.0 million bushels in 2020. Soy oil stocks came in at 1.630 bp vs. estimates of 1.619 bp, better than last month’s 1.528 bp and down from year’s 1.832 bp.

STRATEGY & OUTLOOK

Tight stocks suggest little room for error, but Brazil is expected to plant a record 105.5 million acres this fall and will undercut U.S. exports in January.

WHEAT

ANALYSIS

For the week, Chicago wheat closed $.25 1/4 higher; Kansas City wheat closed $.16 3/4 higher and Minneapolis wheat $.08 higher. Last week, private exporters did not announce any export sales.

In the weekly export inspections report; U.S. wheat exports last week were a four-week low at 8.0 mil bu, down from the previous week’s 12.6 mil bu, below year ago same-week exports of 9.9 mil bu. Over the last eight weeks, wheat shipments averaged 8.1 million bushels/week, below last year’s also-weak 9.6 million/week average during the same period and solidly below the roughly 13.2 million bushels/week average that is needed in order to reach the USDA’s 775 million bushel export projection, which happens to also be the same average weekly shipment pace from this point forward last year. Cumulative export inspections of 409 million bushels are down 2.5 percent from last year’s 420 million, comparable to the USDA’s annual export target reflecting an expected 3.1 percent decline for the year.

STRATEGY & OUTLOOK

Commercials are buying and large spec open interest is at a low. A rally off weekly technical support could be very bullish.

LIVE & FEEDER CATTLE

ANALYSIS

Last week, live cattle closed $.22 higher while feeder cattle closed $.22 higher.

Last week, there was moderate to active fed cattle cash trade in the North at a range of $155 to $158 with the bulk at $156/cwt live and $245 to $249 dressed. Light to moderate volumes traded in the South at mainly $155/cwt. This is mostly steady to $1 lower relative to the prior week.

Last week; the FCE had 853 head offered for sale and 136 cattle sold at $155.50.

The latest USDA steer carcass weights were down two pounds from last week at 925 pounds, which is three pounds below last year.

The weekly export sales report has net beef sales for 2022 of 10,900 mts; 2023 sales of 2,900 mts and shipments of 16,500 mts.

STRATEGY & OUTLOOK

Producers should have window or fence strategies to protect the downside, but allow for upside potential. A struggling economy looks to cap rallies in 2022 and into 2023.

LEAN HOGS

ANALYSIS

Lean hogs closed the week $1.90 higher.

Iowa/southern Minnesota weekly hog weights for week ending Dec.10 has weights at 285.5 pounds vs. 286.4 pounds last week and 290.8 pounds last year.

The weekly export sales report has net pork sales for 2022 of 14,400 mts; 2023 sales of 7,700 mts and shipments of 34,200 mts.

STRATEGY & OUTLOOK

Producers can reduce hedges as values are at weekly support levels.