CORN
Corn futures were up overnight after posting nearly a 20 cent trading range to start the year. Low Weekly Export sales helped trigger selling on Monday after prices got a boost from less-than-expected weekend rains in South Brazil and Argentina. There was also talk that one analyst lowered their South America corn crop estimate to 14-18 mil metric tons if January weather remains dry. However, March corn is up 6 cents to 5.95-1/2 this morning in a bid to hang around the $6.00 price area ahead of next week’s key January Crop Report. Reaction to the final 2021 production is usually the most volatile of any reports. Dec corn is up 3 to the pivotal 5.50 price area. The range of pre-report guesses for 2021/22 corn carryout is 1.325 to 1.505 bil bu. Basis bids for corn and soybeans shipped by barge to the U.S. Gulf Coast softened on Monday in subdued trade following the New Year’s Day holiday, traders said.
SOYBEANS
Soybean futures traded higher overnight as soymeal contracts underpin the complex. March beans were up a dime to 13.65-1/2, Nov up 3 to 1286-3/4, March meal up as much as 3.60 a ton to 4.14.90; and, March bean oil up .65 to 57.07. Monday’s export inspections came in below trade estimates at a time when the U.S. dollar is strong, thus offering resistance to the South American weather market currently in place. Scattered rains are advertised for southern Brazil and Argentina the balance of this week ahead of a drier and warmer trend that keeps the market supported as the narrative continues to suggest a lower South American soybean supply could spell 100 to 150 mil more bean exports for the U.S. The 2021-22 soybean production estimate for Brazil was cut by 7.7% from December forecast to 134m tons due to weather issues caused by La Nina, StoneX said Monday in a report. USDA releases monthly oilseed report on website showing U.S. crushings at 190 mil bu in November, .03% lower than same period last year. Crude oil production was 1.9% higher, and crude once-refined oil stocks were up 14.1% year-over-year. Overnight, Chinese May soybeans were down 72 yuan; Soymeal up 55; Soyoil up 94; Palm oil up 190; Corn up 22. Malaysian palm oil prices were up 57 ringgit (+1.17%) at 4914.
WHEAT
Winter wheat futures were firm last night after posting losses five out of the past six sessions. March Chicago was up 4 cents to 7.62. March KC wheat hit an overnight high at 7.99 on gains of 7-1/2 cents. March MPLS Spring wheat was steady at 9.67-3/4. The strength in the dollar is helping weigh on the wheat complex and acting like a wet rag over price action. The slack export pace has discouraged buying interest to start the week, too. Look for prices to find support from row crops and a dry forecast in the U.S. Plains while struggling to gain traction below most of their moving averages with the path of least resistance being lower. Weakness in the futures market lowered cash prices and deterred farmer sales. Spot basis bids for hard red winter wheat held steady in both the rail and truck markets at terminals across the southern U.S. Plains on Monday, dealers said.
CATTLE
Cattle futures are called mixed. The cattle market is still trending higher, but the weak price action may be signaling a pull back to test lower support levels. The front month saw prices fade off early session highs yesterday to post a low-end close and just above the 10 day moving average. The negative tone and weak close could open the door for additional selling pressure today. With firm retail values, expectations are for cash trade to continue to be steady to higher this week. Carcass values were trending higher into the end of the year and saw a firmer bid on Monday with carcasses adding .77 to 266.03, and Select was 0.67 firmer to 258.90. The load count was light at 129 loads. Beef production was estimated at a record for 2021, and heavier carcass weight and strong cow slaughter added pounds to the total, but on the flip side, demand was robust. Despite a move lower in the grain market, feeder cattle saw selling pressure losing from .200-.625 lower. The cash feeder index traded .14 higher to 165.35 and within $1.00 of the front month futures.
HOGS
Hog futures are called steady to lower. The deferred contracts are showing good strength and an overall uptrend, supported by a tighter hog supply, and a test of the 100 level seems to be in order. Hog futures saw mixed price action as the premium of the futures market to the cash market weighs on front end prices. February hog futures have continued to slide, building a short-term down trend since prices failed at resistance at the $84.00 level last week. Prices are testing lower moving average support, but could be open to a break to the bottom of the range near $75.00, correcting an over-bought market. The Lean Hog Index was softer, losing .45 to 71.75, and holding a 9.375 discount to the futures, adding to the selling pressure in Feb. Carcass values were lower, pressuring the market. Pork carcasses dropped 5.33 to 86.02, on a moderate load count of 381 loads. The weak retail values will pressure the market this morning.
Author
Matthew Strelow