CORN
Corn futures were weaker overnight as the trade awaits the 11 AM release of the February USDA Supply/Demand report. March corn eased 3 cents to 6.32 and Dec slipped 1-/2 cents to 5.79-1/2. Trade estimates point toward a lowering of U.S. carryout to only 1.512 bil versus the Jan Crop report figure of 1.540. Prices remain underpinned with Managed funds adding to net longs to start the week on talk of lower South America supply and the potential for higher U.S. demand. Nearby March corn is deemed undervalued if U.S. demand increases and U.S. 2021/22 carryout drops below 1.20 bil bu. A normal weather performance in South America could help Brazil’s larger 2nd crop. Mato Grosso’s second corn crop is 42% planted as of Feb. 4th and crop can reach 40.4m tons, 24% above last year. China has not been as active a buyer of U.S. corn as soybeans. Last year, China returned as a large buyer of U.S. corn following their New Year celebration. Outside markets overnight were mixed with the dollar up 13 points and crude down 1.76 while correcting from Friday’s new highs.
SOYBEANS
Soybean futures traded lower overnight after making new highs to begin the week. March beans are 9 cents lower this morning to 15.72-3/4. Nov beans are fractionally lower to 14.15-1/4. Trade estimates for U.S. 2021/22 soybean carryout is 310 mil bu vs USDA 350. China is the largest buyer of World soybeans and was planning to take more soybeans this marketing year from Brazil than U.S. However, lower South American supplies could shift some Chinese buying to the U.S. StoneX dropped their estimate of South America’s soybean crop 30 mmt, Argentina down 6.5 mmt; And, Paraguay down 4 mmt. This could increase demand for U.S. soybean and drop US 2021/22 soybean carryout below 300 mil bu. One group sees final carryout closer to 215 due to a 135 mil bu increase in demand versus USDA. Overnight, Chinese May bean futures were down 21 yuan ; Soymeal up 73; Soyoil down 198; Palm oil down 186; Corn up 18. Malaysian palm oil prices overnight were down 87 ringgit (-1.57%) at 5449.
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WHEAT
Wheat futures were down overnight with row crops. March Chicago and KC futures gave back 12-1/2 cents to 7.56-1/4 and 7.79-1/4, respectively. March MPLS wheat is down 9 to 9.12-1/4. Technically, all three contracts are consolidating above their respective 200-day moving average support areas within a weakened near-term chart pattern. Stats Canada is expected to estimate Dec 31 wheat stocks at 17.3 mmt vs 25.0 last year. Weather is still key with a dry 30-day forecast for the U.S. south Plains extending into March. The U.S. drought index shows drier south Plains soils than in November. Drought is expanding in North Africa as well, which may require them to import more wheat.
CATTLE
Cattle futures are called mixed as the market experiences quiet trade to start the week. The past few sessions have seen narrow trading ranges, as the cattle market may be looking tired. This may signal a short-term top. The front month February contract hit first-notice-day on Monday, and this could be adding pressure to the market as long position-holders in Feb cattle need to move to the sidelines or risk delivery. April cattle opened at a new contract high to start the day, but faded setting up a reversal signal on the charts. The cattle market is over-bought. The retail markets has been trending lower, and that may be making the market cautious. At the close, carcass values were lower (Choice -.85 and Select 1.01) with light movement of 80 loads. Cash trade was undeveloped to start the week with bids and offers unavailable. Optimism will be for a firmer cash tone after last week’s strength.
HOGS
Hog futures are called mixed to higher as buyers remain active pushing prices to new contract highs on technical buying. April hog futures extended their gains past the $100.00 level, and posted a new contract high and high close to start the week. Prices did fade off session highs, but settled with a mid-range close. Summer month hogs followed suit, pushing through the $110 barrier, with June still holding above this level on the close. Midday direct trade was noticeably weaker, down 12.61 to 71.83, which pressured hog futures off the session highs. The lean hog index traded .97 higher to 84.30, closing the gap with Feb hogs as expiration is on February 14th. Pork carcass values were firmer at the close, with carcasses trading .78 higher, to 98.19. The stronger demand tone helps support the market overall. The trend in the market is still higher, and still looking for a near-term top. A setback could be in the cards soon in this overbought market, especially if the cash market were to soften.
Author
Matthew Strelow