CORN

Corn futures were unchanged overnight following another round of new contract highs to begin the week.  This week’s trading schedule will be the same as last week as the New Year approaches on Friday . . . an early close on Thursday and no trade on Friday.  The GFS model forecast last evening did not change much for Brazil. The bulk of center west and center south crop areas get routinely occurring rainfall over the next two weeks resulting in favorable crop development.  Net drying is still expected in far southern Brazil, Uruguay, southern Paraguay and eastern Argentina during the coming two weeks. The theme for corn remains the same heading into year-end and looking ahead to the Jan crop report.  USDA estimates U.S. 2020/21 corn demand near 14.825 bil bu versus 13.887 last year. This suggests a carryout near 1.702 bil bu.  Higher U.S. exports and carryout would likely push the estimate closer to 1.460 bil bu meaning more upside probing is needed to encourage more U.S. farmer selling and higher U.S. 2021 planted acres.  The dollar lost 30 basis points overnight keeping the trend lower in the greenback and supportive of commodity prices.

SOYBEANS

Soybean futures stabilized overnight after an abrupt reversal from an overbought technical market on Monday.  Less-than-needed rains across South Brazil and Argentina and dry forecast for those areas sparked continuation of the rally overnight on Sunday and into Monday morning before long liquidation sent prices tumbling, fueled by talk that the ongoing Argentina strike may end this week.  Even an announced export sale to Unknown Destinations was not enough to keep prices from correcting lower.   Loading of more than 140 agricultural export ships in Argentina has been stalled by the strike that started on Dec. 9, the head of the local chamber of soymeal manufacturers said on Monday, on the eve of talks on a new contract. The CIARA-CEC chamber of soy byproduct manufacturers is meeting today with the two main unions representing oilseed workers to try and hammer out a 2021 compensation package.  Futures contracts traded a 10 cent range overnight, predominately lower than Monday’s lower settlement prices, but stabilizing near session lows.  Continued South America dryness and increased demand for U.S. exports and crush remains supportive.

WHEAT

Winter wheat futures were unchanged overnight as the market digests the latest bout of volatility that tends to hit prices every other day, or so.  The near and long term trend remains pointed higher as indicated by moving average indicators.  For now, traders are again opting to respect the 10-day moving averages serving as support when follow-through buying interest fails to materialize.  Talk of needed moisture across parts of Russia and lack of new global wheat export demand offered resistance near key price levels this time.  New buying of corn and selling of wheat spreading due to talk of tighter U.S. corn supplies is also noted.  Managed Money is net long an estimated 7,000 contracts of SRW wheat after unloading a bunch yesterday.  A scan of the export tender page overnight showed Algeria seeking optional origin wheat.

CATTLE

Cattle calls are for steady to firmer led by cash market strength and technical buying.  Cash trade was undeveloped on Monday, but expectations are for higher off last week’s $110 trade.  Snow forecast across northern states may help support the market. Packers are likely short bought going into January, and may be looking to lock in supplies.  Feb cattle are fighting resistance at 116.00 while targeting the gap at 119.475 from back in Feb.  April has that gap at 120.775.  Wholesale carcass finished mixed and off midday strength yesterday, as Choice carcasses gained .28 to 207.82.  Select was down 1.28 to 196.65.  The moderate load count was at 160.  Wholesale values seem to be trying to find some stability.  90% trim prices are trending higher and can support the cattle prices overall.  Trim values have been well under 5-year averages.  In feeders, strength in the corn market limits upside potential. 

HOGS

Lean hog calls are mixed as heavy supplies and weak cash markets weigh on futures, despite strong jump in carcass values at midday yesterday.  Slaughter numbers should stay heavy into the first half on the year, weighing on prices.   The CME Lean Hog Index lost .42 to 61.62.  Feb is trading over the index by 4.88, which will limit upside potential.  Cash markets look to stay weak into the end of the year.  The Pork Product index is trending lower, closing .93 lower on Monday to 70.95.  Retail values closed  2.51 higher to 71.85.  Carcasses were 6.09 higher at midday.  Strong product movement reached 582 loads on Monday.   Front month futures have a battle going on with overhead resistance, and will need some fundamental support to push higher.

Author

Matthew Strelow