CORN

Corn futures were up a nickel overnight putting March corn back within striking distance of the 10-day moving average situated at 5.23-1/4.  The nearby contract got to 5.17-1/4.  Dec was up 1-1/2 cents to 4.36-1/2.   The market is retaking last week’s losses, but some of the keys moving forward depends on U.S. planted acres, weather and supply versus demand.  Weather watchers are still trying to figure out 2021 north hemisphere weather.  The census appears to be decent U.S. spring conditions followed by a growing possibility for warmer and drier especially west Midwest.  This could also be true for Russia.  Much depends upon La Nina.  Most look for U.S. corn acres to be near 93.0 with an ending crop of 5.390 bil bu on a yield of 181.0.  Carryout pencils out near 1.215.  Meanwhile, strong demand is leading to a potential rise in U.S. exports from USDA by 200 to 300 million bushels.

SOYBEANS

Soybean futures traded a 20-1/4 cent range overnight between 13.53-3/4 and 13.33-1/2 (Mar) overnight.  Nov beans had a range between 11.35-1/4 and 11.18-3/4.  Both contracts are in positive territory this morning with March up 6 to 13.49-1/2 and Nov up 3 to 11.33-1/4 after seeing a positive reversal in yesterday’s close.  Strengthening old crop new crop spreads could indicate tighter U.S. 2020/21 U.S. supplies.  Weekly U.S. soybean exports on Monday were at the high end of expectations near 2.0 mmt versus 1.0 to 2.10 mil expected.  The lack of Brazil exports scheduled for next month could increase demand for U.S. soybeans.  There is still rain in the two week forecast for Argentina and Brazil, but demand strength remains a key driver to the months-long bull market.

WHEAT

Wheat futures were mixed overnight, trading both sides of steady as was the case with row crops.  Wheat continues to take their cues from corn and bean price movement.  March Chicago wheat is down 3 cents to 6.45-1/2.  March KC unchanged at 6.27-1/4; And, March Mpls steady at 6.36.  Look for more choppy trade as participants trade weather potential.  NOAA reports a big increase in La Nina which would suggest a drier and warmer U.S. and Russia spring and summer.  For now, stormy weather is in the forecast for the Plains next week which would give some areas much needed moisture.

CATTLE

Cattle futures are called steady to higher.  Livestock markets are seeing good money flow in general on value buying in the commodity sector.  April live cattle look to challenge the contract high. $123 is a strong technical barrier that may send a signal for a move to 130.  Yesterday, futures shook off a slightly negative COF report and saw higher trade, supported by strong retail values, and technical buying.  The cold storage report showed total pounds of beef in freezers were up 4% from the previous month and up 11% from last year… heavy with production, but acceptable.   This won’t likely impact the market, but is reflective of the heavier overall production in the 4th quarter.  Cash trade is not yet developed, but strong retails bring optimism.  Carcass values finished higher on Monday holding midday strength.  Choice carcasses rose 3.91 to 226.73 and Select gained 2.87 to 216.21. The strong trend should support the market.

HOGS

Lean hog futures are called steady to firmer amid good technical buying.  April hogs broke through resistance of the October highs and deferred contracts maintain their strength with summer months targeting $90.  The cash hog market is mixed with heavy slaughter at 498,000 head and carcass weights holding 5 to 6 pounds over last year, keeping production heavy.  This is keeping pressure on Feb hogs overall.  Pork carcasses finished the day .70 lower to 82.13 with a load count moderate at 307 loads.  Carcasses have trended higher and back above the $80 level.  The Lean hog index closed .15 higher to 65.55 while running at a 5.075 discount to Feb, which limits upside. Demand optimism stems from strong Chinese pork prices and a strong return of China into the export market last week.  Meanwhile, frozen pork supplies were down 3% from the previous month and down 30% from last year.  Stocks of pork bellies were up 32% from last month but down 54% from last year, very much a reflection of the pork demand given the heavy production.  This is viewed as slightly favorable for prices today. 

Author

Matthew Strelow