CORN

Corn futures were mixed overnight, trading both sides of $5 in the front 3 months which likely reflects an accurate fundamental value for the market at this time.  Dec corn was mostly steady near 4.30. Weekly Export Inspections will be out this morning. There is still hope for an increase in demand for corn-based ethanol once the U.S. consumer is vaccinated and fuel consumption increases.  For now, South American weather will push prices around as traders jockey for position until more is known about the actual size of their crop.  Argentina has raised their corn crop rating but is still well below average.  Brazil’s second corn crop plantings are later than normal.  In the U.S., dry conditions for this year’s planting season are being talked about.

SOYBEANS

Soybean futures traded two sided overnight following an unsettling performance last week.  Much of the volatility can be tied to post-January Crop Report price discovery and technical turbulence as the trade argues what is fair value for the oilseed complex.  Bullish corn and soybean numbers have not changed, but Covid lockdown headlines and the size of South American’s crop production hang in the balance heading into the final week of January.  March beans saw a range between 12.98 and 13.22-3/4, including a new low for the new year.  A close below 13.00 suggests a test of 12.50 which would slow new farmer selling and increase end user buying.  The contract was firm at 5:30 this morning, hovering around 13.13.  Nov beans were down 3/4 cent to 11.11-1/4.

WHEAT

Winter wheat futures traded 15 cent ranges overnight on both sides of Friday’s settlement prices.  Mpls Spring wheat, too, was mixed.  Taking their cues from row crops, new 2021 lows were forged before posting modest gains.  Managed funds were seen potentially flipping their net long position to a net short late last week.  Last week’s news that Russia would not impose an export quota but will impose export taxes Feb 15 and March will keep traders on their toes.  March CBOT, at 6.36-1/2 is targeting it’s 50-day moving average support at 6.18 after breaking through 10 and 20 day support on Friday.

CATTLE

Cattle futures are called steady to lower. Prices rallied to new highs into the close on Friday and ahead of the monthly Cattle on Feed report.  The data came in a bit bearish versus expectations.  Actual placements were 101% vs a year ago, compared to expectations of 97%  Total cattle on feed was 100%, while the market expected 99.3%.  Despite the bearish figures, the market might be looking beyond the near term as expectations for an improving economy and less Covid restrictions come spring and summer.  With the breakout to the upside last week, cattle marketers may look to add hedge coverage in April cattle. The contract soared 2.65 higher to a new high of 122.60. 120.20 yesterday before closing at 119.95.  Feeders were also sharply higher led by March to 144.15.

HOGS

Lean hog futures are called steady to firmer after posting a new highs on Friday.  April hogs rose to 76.25 while topping the Nov 2019 highs for the contract.  Technically, the market has gained some bullish stature following Wednesday’s reversal.  Cutout values were strong on Friday and gained more than $5.00 for the week.  Pork production for the week ending January 9 broke a record at 627.9 mil pounds, up from 473.2 the previous week and 585.9 mil a year ago.  Strong exports led by last week’s tally from Mexico, followed by China and Canada highlighted the weekly export totals.  The demand story is edited with ideas that short-term, the market may be impacted by consumer hording.

Author

Matthew Strelow