CORN
Corn futures were lower overnight. The March futures contract goes off the board today, currently trading near 5.55. May corn was down 5 to 5.33-1/2, Dec down 1-1/2 cents to 4.82, mid-range of last night’s 3 cent trading range. For the week, May is down 12 cents and Dec unchanged while narrowing daily trading ranges throughout the week to form pennants on their respective charts. Violent movement in the dollar is influencing some of the post-March USDA report sentiment in grains. The dollar was down hard the past 3 days and then back up 45 points this morning, lending outside-market pressure. Crude, too has been on the ‘watch list’ for corn traders and has stabilized after a lot of topping action this week.
Persistently strong corn prices and favorable weather outlooks through May maintain area, yield and production estimates of the 2021/22 U.S. corn crop at 15.4 bil bu, according to our commodity brokerage clearing firm. Corn production totals are still expected up 8.5% from last season, benefiting mostly from acreage recovery after significant prevented plantings over the past two seasons, as well as potential record yields. In its long-term outlook forecast from February, the USDA is expecting corn and soybean acres to reach 92 and 90 mil acres, respectively. The next survey-based estimate of acreage will be released in the upcoming March Prospective Plantings report.
SOYBEANS
Soybean futures traded 5 to 7 cents lower overnight to 14.07-3/4 (May) and 12.37-3/4 (Nov). Nearby March looks to end its trading today at 14.25. Soymeal was also weaker, but soyoil was firm with contracts jumping to new contract highs yesterday. Higher palm oil prices and talk of higher U.S. demand for soyoil biodiesel is supportive. Malaysian palm oil prices were up 66 ringgit at 4,126 (basis May) a 13 year high still supported by tight supplies, rival vegoils. Chinese Ag futures (May) settled up 8 yuan in soybeans, down 17 in Corn, up 10 in Soymeal, up 136 in Soyoil, and up 262 in Palm Oil. For the week, May beans have lost 23 cents, and Nov a dime following a lackluster March USDA update. However, prices are technically strong while tracking upward 20-day moving average and longer term trending support indicators.
Our brokerage clearing firm maintains an initial 2021/22 U.S. soybean production outlook at 4.34 bil bu based on weakening prices and favorable long-term weather outlooks. Acreage is still expected to grow 3.6% in 2021/2022 to 86.1 mil acres, with gains in most major producing states. Besides looking to sow prevented planted areas that totaled nearly 1.5 million acres of soybeans last season, farmers will want to increase sown acres of most grain and oilseed crops to capitalize on prices that have reached highs not seen since the 2013/14 season. In its long-term outlook forecast from February, the USDA is expecting corn and soybean acres to reach 92 and 90 million acres, respectively.
WHEAT
The wheat complex was mixed overnight. Chicago wheat was down 2-1/2 cents to 6.40 in the May contract. May KC wheat was up a penny to 6.05-1/2; And, May Mpls was steady at 6.34. HRW and SRW contracts are slumping to fresh multi-week lows for the week on net selling after USDA failed to lower EU and Russia wheat exports on their March report. Egypt bought Romanian wheat in their tender with U.S. export prices unattractive to North African and Mideast buyers. An overnight rebound in the dollar combined with softer row crop prices is also weighing on wheat. For the week, May KC has lost 22 cents and May CBOT 13 cents with 100-day moving average support now within a dime of current price levels. May Mpls is trading around it’s 50-day moving average after shedding about 12 cents this week. Sources report China is scooping up supplies of U.S. white wheat to feed livestock, pushing export forecasts for the grain usually used to make sponge cakes and noodles to a 27-year-high. The purchases are the latest disruption in commodities markets caused by Chinese buying of grains and oilseeds during the coronavirus pandemic, pushing prices of major commodity crops to multi-year highs.
A nearly 60% chance of a transition from La Niña to neutral conditions during the Northern Hemisphere spring 2021, between April and June, a U.S. government weather forecaster said. A significant and important precipitation event is still expected tonight through Sunday from the HRW wheat Region into the southwestern Corn Belt and northern Delta. Strong to severe thunderstorms will occur from TX and OK into the Delta and southern MO. Last evening’s GFS model run was then notably aggressive with a follow-up weather disturbance shown to promote significant precipitation from KS through IL.
CATTLE
Cattle calls are mixed to higher. April futures are struggling against a steady to lower cash market that’s ranging $113 to $114/cwt this week for the majority of trade. April still holds a premium to cash, and upside will be limited into the weekend. Carcass values finished the day mixed with Choice losing midday strength, and finishing .62 lower to 226.67, and Select .25 higher to 220.07. Product movement was good at 133 loads. Deferred contracts are supported by the strong hog market, and prospects of tighter production with optimism for good demand. October and December futures finished with new contract highs or high closes on Thursday. Carcass weights have dropped 20 pounds in the past two week, moving carcass weights in line with last year. The drop in weight was aided by the impacts of the winter storm a couple weeks ago. USDA weekly export sales stayed supportive with new sales last week at 20,900 MT and Shipments of 17,800 MT, both numbers were trending above the 4-week average. Korea and Japan were the largest buyers of U.S. beef.
HOGS
Hog calls are higher on follow-through from new highs on Thursday and while poised to break the $100 barrier in summer months, and April moving into the mid-$90s. The hog market is heavily over-bought, and is due for a setback, but the strong fundamentals will keep buyers active on pullbacks. The fundamental strength has been fueled by the possible resurgence of ASF in China. Reports of the disease have been coming across the new wires, and Chinese hog prices are trending higher in China. Strong weekly exports sales added 32,500MT of new sales last week, and shipments of 39,300 MT. China and Mexico were the top buyers of U.S. pork. The cash market supports the April contract: the Lean Hog index gained an additional .68 to 86.76 to its highest levels since June of 2017. Pork carcasses gained 2.02 to 99.69. Despite the strong price, movement stays strong at 341 midday loads.
Author
Matthew Strelow