CORN

Corn futures were down a nickel to 7 cents overnight.  May corn traded from 5.48-13/4 to 5.42-1/2 and Dec had a 3-3/4 cent range between 4.72-1/2 and 4.68-3/4 ending a five day streak of contract high trading to 4.79.  !0-day Moving average support lies at 4.64-1/2 for the new crop contract.  Part of the slowdown in upward momentum stems from volatility in the dollar.  The currency traded sharply lower yesterday before rallying back to a one-week high overnight with a 50 basis point gain.  Deliveries against March grain and soy futures should be minimal today, the first notice day.  Traders expected no deliveries in corn.  The trade will continue to monitor weather impacting final South American corn production and World buying of U.S. commodities to determine if there is more downside potential in store on this lengthy rally.  Looking ahead, there is concern that in March, USDA may leave the U.S. 2020/21 corn balance sheet close to their February numbers.   The Agency may wait until after the March 31 Acreage and Stocks report to make adjustments to demand.  Overnight, South Korea bought 137,000 tons of optional-origin corn, according to tender wires.

SOYBEANS

Soybean futures continued to soften overnight, losing 16 cents in the May contract to 13.91.  Chinese Ag futures (May) settled down 73 yuan in soybeans, down 18 in Corn, down 117 in Soymeal, down 22 in Soyoil, and down 12 in Palm Oil.  Malaysian palm oil prices were down 42 ringgit at 3,742 (basis May) on money positioning.  Nov beans were down 12-1/2 cents to 12.18-1/4.  Soybean, soybean oil and soybean meal deliveries against March futures on first noticed day today are all expected to be low.  Bean futures made new highs yesterday before selling off and making bearish key reversals on the charts which led to follow-through topping action overnight.  Recent price action may be an indication that a near-term top is forming as South American harvest activity increases.  Weekly U.S. soybean exports sales were only 6 mil bu yesterday.  U.S. Jan census crush will be released on Monday and is expected to confirm that there was no slowdown in the U.S. soybean crush through January.  Most estimate the crush at a record large 195.2 mil bu vs 188.8 mil bu last year.  Last evening’s South American GFS weather model continued to show beneficial rainfall from northwest Cordoba through Formosa and Salta in Argentina in the next seven days. The midday European Model was wetter for this area compared to the evening GFS model.  In Brazil, Mato Grosso will continue to be notably wet in the next two weeks leading to more fieldwork delays. This will lead to some fieldwork delays farther south than where they have recently been.

WHEAT

Wheat futures were down overnight, influenced by topping action in row crops and an overnight spike in the dollar.   May CBOT wheat fell 12 cents to 6.63-3/4, up about a dime for the week.  May KC lost 13 cents to 6.39-1/2 and is about even for the week.  May Mpls spring wheat futures are down 6 to 7 cents to 6.44, off 4 cents for the week.  Lower U.S. stocks and higher bond yields offer additional resistance to the complex. Weekly U.S. wheat exports sales were only 6 mil bu as a rally in World ocean freight rates reduce U.S. competitiveness to North Africa and Mideast buyers.  Seasonals suggest a lower futures trend into U.S. spring weather and harvest.

CATTLE

Cattle calls are for steady to higher ahead of expiration of the nearby Feb live cattle contract today.  Cash markets are still developing.  There was some additional trade at $114 in the south this week followed by talk of $115.50 trade in IA late yesterday afternoon.  Those numbers were steady to $1.50 higher than last week.  Northern dressed trade was $181-182, $1-2 higher than last week.  The Fed cattle exchange will hold a special auction today, and additional clean up trade should finish out the week.  Slaughter was estimated at 121,000 on Thursday.  The heavy supplies of available cattle have kept pressure on the front end of the cattle market, and the cash market.  Carcass values were softer on Thursday with Choice carcasses slipping .36 to 240.39, and Select down 1.00 to 228.79. Product movement was good at 92 loads.  Feeders look to maintain a bid, supported by weaker grain markets and follow through buying following Wednesday’s strength.

HOGS

Lean hog calls are steady to higher.  The market failed to gain traction yesterday from Wednesday’s limit higher close as some profit taking helped slow the market.  After a strong week, and month, some correction and position-squaring may keep prices in check today.  The fundamental and overall technical picture stays extremely supportive, though.  Strong closes in the retail market should underpin contracts as hog carcasses gained 2.99 to 95.13 on 281 loads.  Pork carcasses are $3.00 higher since Monday, as product prices have stayed strong.  The cash market remains, and the Lean hog index is trading at its highest levels since Aug 2019, after gaining .96 to 79.12.

Author

Matthew Strelow