CORN

Corn futures were higher overnight in keeping with the bullish trend.  March corn made a new high at 5.58 on gains of 6 cents.  Commercials have been active in rolling their short positions from March to May as corn prices continue to climb.  Dec corn was up 3 cents to 4.54.  Acreage competition between corn and soybeans is expected to keep Dec corn well supported.  We’ll get weekly export numbers this morning as the trade questions whether, or not USDA’s take on China’s corn imports are too low, South America’s corn crop is too high, U.S. corn exports are too low and estimate of U.S. 2020/21 corn carryout is too high?  Trade estimates for this morning’s Export Sales are a record 6.0 to 7.8 mil tons versus 1.85 mil last week.  Some new crop sales may be on the  books, too.  Overnight, South Korea was in the market for 140,000 tons of option-origin corn and Turkey seeks 235,000 tons.  Weekly U.S. ethanol production was up from last week, but still down from last year.  The current ethanol production pace is tracking just above the level needed to reach USDA projection of 4.950 bil bu.  Margins remain negative and ethanol stocks were up from last week and last year.

SOYBEANS

Soybean futures were narrowly mixed overnight with prices sticking to 10 and 20-day moving averages and trending sideways.  The complex remains underpinned by demand for U.S. domestic soymeal, and talk of tight summer bean supplies.  This morning’s USDA Weekly old crop soybean export sales are estimated near 300,000 to 750,000 tons versus 466,000 last week.  New crop soybean export sales are estimated near 250,000 to 500,000 tons versus 1.564 mil last week.  Weekly soymeal sales are estimated near 100,000 to 350,000 tons versus 142,000 last week.  U.S. soymeal commitments are the 2nd highest on record.  Overnight, Egypt and Tunisia bought 58,000 tons and 36,000 tons of option-origin soyoil, respectively.  Talk that truckers were blocking roads into Argentina ports and that Argentina weather could soon turn drier is offering support to soybeans.   Forecasts call for drying in much of the region through next Wednesday.  There will be some increase in erratic shower and thunderstorm activity Monday through Wednesday; though, this is likely to favor the west.  In Brazil, conditions are still expected to be favorable for crops in most of the nation.  In China, soybean crush margins are improving from last week.   There is now talk that ASF is back in the China hog herd.  Some say the virus is not as strong as the previous strain but is spreading faster.  So far China’s domestic hog prices are dropping which does not suggest a problem with hog production.

WHEAT

Wheat futures were mixed overnight buoyed by new highs in corn, yet held back somewhat by a 30 point basis point jump to a new high for the move in the dollar.  Traders will have headlines to consider today as Russia’s Putin states the “situation in global food marketing is worsening.”  The economy minister said, “Russia is preparing for a permanent grain export mechanism which will start April 1 for support of grain producers.”   For now, March Chicago wheat is down 2 to 6.46-1/4 after a strong recovering from nearly 20 cent losses in Wednesday’s session.  March KC wheat is up 2-1/2 cents to 6.28, and March MPLS is up 2 to 6.27.  Tomorrow morning, Stats Canada will release its estimates of Canadian crop stocks as of Dec. 31, 2020.  For now, trade estimates for this morning’s USDA Weekly export Sale range between 250,000 to 700,000 tons versus 380,000 last week.  Overnight tender activity had Japan buying 87,000 tons of U.S./ Canadian wheat, S. Korea bought 29,000 tons of Australian wheat and 32,000 tons of U.S. wheat.  Jordan passed on 120,000 tons of optional origin wheat.

CATTLE

Cattle futures are called mixed.  Last week, front-month futures (April) closed the week well off the highs with a “Doji” close describing a candlestick term.  This type of chart close is bearish if the following week continues to trend lower.  These next two days are key.  The daily close on Friday itself was a bearish daily reversal.  Combined with several momentum-based indicators, the weekly and monthly charts are now overbought where there is increased risk of a selloff.   Yesterday’s Fed cattle exchange traded at $113.75 versus asking prices of %115, higher, but trailing futures.   Look for additional cash trade to develop in the countryside today or hold until tomorrow.  Demand remains good, and this morning’s weekly exports should stay supportive.  Choice carcasses did slip yesterday, but still trading $235.  Farther out, deferred contracts stay supported amid prospects of a tighter long-term supply picture.  Strong grain markets may limit gains, especially in feeders, which closed soft yesterday as corn rallies.

HOGS

Lean hog futures are called steady to higher.  Snow and a frigid forecast is viewed as friendly for prices, and the technical breakout continues as the market posts contract highs.  Demand has also been a boon for prices.  This morning’s weekly export sales should be supportive following last week’s 52,900 mt last week.  Carcass values softened yesterday, but are still above the $80 level, with moderate movement at 321 loads.  One concern for the bulls lies within the fact that the rally has the market headed into an over-bought condition that could trigger a pullback at some point.

Author

Matthew Strelow