CORN
Corn futures were lower overnight with December down 6 cents to 4.72-1/4 and threatening the up-trend by testing 20-day moving average support. Nearby May corn was down 6-1/4 cents to 5.32-3/6 while tightly wound within a sideways, consolidative pattern just above the contract’s 50 day moving average. The contract has been rangebound for the past two months. Expanded speculative position limits for agricultural futures are scheduled to go into effect today and could eventually add to market volatility as commodity funds are allowed to build larger bets on market direction. Heading into last night’s trade, Managed Money was net long and estimated 351,000 corn contracts.
In South America, Argentina will reduce crop stress that has reached its most intense level since late December and early January over this past week in some areas. The relief should be sufficient to stop the decline in crop conditions. Some of that relief will begin with rain early this week and follow up rain will occur during the weekend followed by milder temperatures to help conserve soil moisture. The implications of this is that once dryness relief occurs early this week there is not likely to be another period of such significant stress on crops during the balance of this month and probably for the balance of the growing season. Concern remains over the long term outlook for corn production in Brazil as confidence is high that monsoonal rainfall will end normally this year which could harm yields in the late planted crop. The bottom line for the United States remains one of improved soil moisture in many key winter crop areas in Nebraska, Kansas and Colorado that were very short of moisture prior to the weekend. Good planting progress occurred in the southern states for early season corn.
SOYBEANS
Soybean futures lost a dime overnight in May and Nov to 14.03-1/4 and 12.33-1/4, respectively, before trimming losses. Meal contracts were also weaker, but soyoil made new highs. Chinese Ag futures (May) settled down 109 yuan in soybeans, down 13 in Soymeal, unchanged in Soyoil; and, down 4 in Palm Oil. Malaysian palm oil prices were up 21 ringgit at 4,146 (basis May) at midsession lifted by a jump in crude, rival vegoil prices. Managed Money is net long an estimated 150,000 soybeans; 52,000 lots of soymeal; and, 109,000 soyoil. Weekly Export Inspections will be out this morning. Overnight, Iran tendered for 30,000 tons of optional-origin soyoil, 30,000 tons of sunoil and 30,000 tons of palm oil. The monthly NOPA report is scheduled for later this morning, too. U.S. soybean processing plants likely notched their busiest February ever last month, with strong demand for soymeal and soy-based biofuels fueling a fast crushing pace, according to analysts polled. NOPA members were estimated to have crushed 168.61 million bushels of soybeans during February. A month ago, NOPA reported a crush of 184.654 mil bu. In February 2020, the NOPA crush was 166.288 mil bu, the biggest February crush on record. February crush estimates ranged from 158.828 mil to 175.3 mil bu. Soyoil supplies among NOPA members at the end of February were seen rising to 1.839 billion pounds compared with 1.799 bil at the end of January and 1.922 bil at the end of February 2020. Brazil remains mostly good for late season crops that are in the ground, but frustratingly slow field progress will continue for unharvested soybean and unplanted corn progress.
WHEAT
The wheat complex was weaker overnight led by KC, dragged down by weakness in row crops, moisture in some dry areas of the Plains, and a firm dollar. Overall, though, dryness worries remain in the northern Plains, southwestern Plains and far south Texas where more rain must fall soon. Elsewhere, Ukrainian wheat export prices lost $1-$2 a tonne over the past week after a slight decrease in Russian wheat prices and an expected jump in the 2021 crop, analysts from APK-Inform consultancy said. May KC was down 4 overnight to 5.99-1/2 to the contract’s 100-day moving average for the first time since mid-Sept, and below $6.00 for the first time since the Jan 12. May Chicago wheat was down 1-1/2 to 6.37. May Mpls is down a penny to 6.32-3/4.
CATTLE
Cattle calls are mixed to higher following last week’s strong closes, improving the technical picture in deferred contracts. Cash markets traded $113 to $-114/cwt last week and is expected to hang around that price area again this week, keeping overhead pressure in place for the market. The premium of the futures to the cash is growing throughout the complex. Carcass values finished lower last week with Choice carcasses dropping 7.21 and Select down 1.61. Prices overall are still historically high and above the 5 -year average and product movement has been very good. A strong drop in carcass weights have supported prices as carcass weights trend lower with the impacts of the winter storm in the south a couple weeks back and the high corn prices pressuring input costs.
HOGS
Hog calls are for steady to higher. Prices consolidated on Friday on some profit-taking with technically over-bought and due for a correction. Other than the potential for some technical selling and long liquidation, fundamentals remain supportive for the market challenging new highs again this week. Cash markets remain extremely strong, helping support the front months. The Lean hog index, trading at its highest levels since June 2017, gained .89 to 87.56 to end the week. Pork carcass values trended higher on the week amid good demand. Carcasses are trading well over the 5-year averages, providing the support in the cash market.
Author
Matthew Strelow