CORN

Corn futures traded mostly steady inside Monday’s trading ranges overnight.  As the trade looks ahead to the December Supply/Demand report scheduled for release this Thursday at 11:00 AM Central, participants are likely to be content with prices trading around the 4.20 to 4.25 area while maintaining the up-trend.  This price level is also where the contracts’ 10 and 20-day moving averages are converging, signaling an area of consolidation.  In the meantime, a surge in the dollar off of last week’s new lows, as well as South American weather will push the market around a little bit.  In Brazil, the 6 to 10 day sees good rainfall in most of the growing regions; though, a little concern remains in western Mato Grosso do Sul.  This area will be notably dry through Friday before welcome rain occurs this weekend into next week.  In Argentina, dryness concerns remain in the southern part of the nation in the next two weeks, especially in localized areas.  Some shower and thunderstorm activity will occur occasionally; though, much of the rain will likely be erratic.  The lack of new U.S. corn sales to China is noted, but weekly export inspections indicate reported sales of corn and beans are actually being loaded out at U.S. ports.  As bean prices go, so does corn.  Meanwhile, concern over an increase in world Covid cases could force additional shutdowns and a continued slowdown in food and fuel demand.

SOYBEANS

The soybean complex was mostly lower overnight with the 11.50 price area in Jan beans acting as a magnate for traders going into Thursday’s USDA report.  Trade estimates for U.S. bean ending stocks is 168 mil bu versus 190 mil in the November report.  Strong demand for soy products and a distinct up-trend continues to buoy the complex.  Exports remain robust highlighted by a record two-week shipping pace sourced from the U.S. China took 56.5 mil bu of U.S. soybeans or 63% of the weekly export total.  China’s loadings from U.S. ports could stay active well into February, and there’s also chatter of new crop buying from Brazil and the U.S.  Some feel that China loadings from the US will stay active well into Feb.  Social media reported:  “According to government data, #Brazil imported 625kmt of #soybeans since Jan 2020, including 30.5k from #US. Key supplier is #Paraguay. But now more than 600 Paraguayan trucks carrying soybeans have been stuck on border with Brazil for almost 2 weeks.”

WHEAT

Wheat futures were mixed with a weak tone overnight while managing to close well off their new lows for the move on Monday.  Chicago wheat was down 3, KC down 4-1/2 and Mpls down 3.   Concern about next year’s crop in Russia, U.S. and Argentina, combined with the weak dollar is providing enough reason for end users to add coverage on market pull backs like this latest one.  Look for choppy action into Thursday’s report now that stochastic technical indicators have reach oversold territory, an indication that bearish momentum may begin to wane.  Trade estimates for U.S. wheat ending stocks is 874 mil bu versus 877 mil in the November report.  World ending stocks’ average estimate is 321.14 versus 320.45.

CATTLE

Cattle futures are called lower after a weak finish on Monday due to liquidation pressure tied to First Notice Day for Dec futures.  Expectations for steady to lower cash this week due to retail softness is also noted.  Packer margins are good, but with slipping retails, it will be difficult for them to lift bids higher.  Choice carcass finished sharply lower, losing 4.22 to 230.80, and Select was down 8.03 to 209.48.  The drop in retails will weigh on Cattle prices this morning.  Choice carcasses are now $14 off recent highs pushing $244. 

HOGS

Lean hog calls are mixed to lower as heavy pork production and large slaughter continues to act as a wet rag over the market.  Feb gapped lower lower on Monday and closed below the 100-day Moving Average.   This brings additional technical weakness given the negative fundamentals.  Pork production hit 613 Million pounds last week, the highest weekly pork production in history… a reflection of heavy slaughter runs and weights.  The estimated weekly slaughter was 2.777 million head last week adding, including Saturday’s kill, keeping pressure on cash prices.  Monday’s slaughter stayed heavy at 497,000 head.  The CME Lean Hog Index was lower by .29 to 66.26.  Now at a premium to Dec futures, this could limit some selling pressure ahead of contract expiration on Dec 14.

Author

Matthew Strelow