CORN

Corn futures were firm overnight, underpinned by new highs in beans.  The Argentinian agricultural ministry, over the weekend, announced that it will lift the ban on corn exports which was announced in December and introduce a temporary 30,000 ton daily cap on sales abroad.  The export ban had angered many of the corn growers in Argentina and led to strikes taking place.  The cattle and poultry industry in Argentina uses corn to fatten chickens and cows.  The government had initially hoped that by keeping more corn in the country, the cost of feeding livestock would fall, increasing domestic food supplies.  However, farmers railed against the suspension and launched a strike, saying the full ban put downward pressure on production and forced them to temper investments.  Argentina’s soy, corn, wheat and sunflower seed associations said such intervention in export markets eroded confidence and would lead to an immediate withdrawal of investments.  Corn futures are hovering around last week’s new contract highs heading into tomorrow’s key USDA January Crop Report.  The average trade estimate for US 2020/21 corn carryout is near 1.599 bil bu vs USDA 1.702.  Many believe the number could be lower.  Dec 1 U.S. corn stocks could be near 11.951 bil bu vs 11.327 last year.  The average trade estimate for Brazil and Argentina corn crops are near 155 mmt versus USDA 159.  Some feel final South America corn crop could be 10-15 mmt below USDA’s last guess.  Speculators and investors have kicked off the new year with record bullish views in corn, as global stockpiles are set to shrink.  Managed Money is still net long an estimated 332,000 corn contracts to begin the week.

SOYBEANS

Soybean futures were up overnight led by old crop contracts.  The bean complex continues to trend higher, supported by talk of increased Chinese demand for U.S. soybeans and a drier Argentina forecast.  The latest weather update for Argentina remains one of concern especially in the southwest where rainfall is expected to be lightest and least frequent.  The entire nation will dry down making this week’s rain extremely important.  Soil moisture last Friday was very short.  Early indications suggest that most of the driest region will get “some” rain which may offer some short term relief, but it may not be enough in southern Santa Fe, northern Buenos Aires or parts of Entre Rios where greater stress may evolve next week after temporary relief.  It will be imperative that dry weather through Jan. 22 is followed by substantial rain.  Without it, crop stress will likely start robbing the nation’s crops of yield once again.  Last week, Argentina lowered their soybean crop rating to 27% Good-to-Excellent from 42% the previous week and 52% last year.  Soils were 51% adequate vs 71% last week and 94 last year.  Many view tomorrow’s USDA Jan Crop report as reason to be optimistic toward soybean prices.  March beans reached a new high of 13.88-3/4 overnight on gains of 14 cents.  Nov beans reached 11.70 on gains of 8-1/4 cents.  The average trade estimate for U.S. 2020/21 soybean carryout is near 139 mil bu vs USDA 175.   Dec 1 U.S. soybean stocks could be near 2.920 bil bu vs 3.252 last year.  The average trade estimate for Brazil and Argentina’s collective soybean is crop near 179 mmt versus USDA 183.  Coming out of the weekend, Managed Money was net long an estimated 197,000 soybeans; 89,000 lots of soymeal, and; 113,000 soyoil.

WHEAT

Wheat futures traded two-sided overnight as row crops guide prices higher, and the rising dollar pressures the market. March CBOT wheat is down 3 cents this morning to 6.35-3/4.  March KC is off 1-3/4 cents to 5.93; And, Mar Mpls spring wheat is unchanged at 6.07-3/4.   We do not expect major adjustments to tomorrow’s January Crop report.  USDA is projecting a 20 mil bu increase in 2020-21 U.S. wheat exports with their current estimate of 985 mil bu.  The average trade estimate for U.S. Dec 1 wheat stocks is near 1.695 bil bu vs 1.841 last year.  The average trade estimate for U.S. 2021 winter wheat acres is 31.5 mil vs 30.4 last year.  Tender activity showed Pakistan buying 100,000 tons of optional-origin wheat.  Managed Money was net long an estimated 14,000 contracts of SRW wheat coming into last night’s trade.

CATTLE

Cattle market calls are mixed after a quiet, but firmer past few days of trading.  Live cattle have been trending higher overall, while consolidating the past 3 sessions.  Overall, the trend is losing momentum which could reinforce some back-peddling if follow-through buying interest fails to materialize.  Last week’s cash trade developed at $112, most steady with the previous week.  Slaughter was estimated at 117,000 head, steady with the previous week, but 7,000 under last year, reflective of the tighter cattle supply. Carcass values finished slightly higher, and choice carcasses were up .99 to 206.80.  Select gained .10 to 196.69. 

HOGS

Lean hog calls are mixed as the front month contract continues to struggle with October price resistance.  Deferred contracts are showing strength, challenging or establishing new highs.  Higher grain prices may be long-term supportive on futures, limiting expansion due to higher feed cost.  Heavy production and available hogs for slaughter weigh on the market.  Weekly Slaughter estimated at 2.458 million, 20,000 less than last year.  Heavy weights and total production keep pressure on front month futures.  Pork carcasses finished the day 1.18 higher to 81.00 and with a nice rebound in value going into the end of the week.  Good product movement was seen at 293 loads.  The higher trending Lean hog index closed .54 higher to 62.96 and is trading 5.74 under February.

Author

Matthew Strelow