The CME and Total Farm Marketing offices will be closed Monday, January 18, 2021, in observance of Martin Luther King Jr.

CORN

Corn futures traded two-sided overnight with the market beginning to show signs of consolidating in their new, higher trading ranges.  The upcoming three-day weekend is likely to usher in more choppy trade as participants monitor the uptick in farmer selling of 2020 inventory and new crop, as well as South American weather.  Rain is still likely to return to Argentina in the last week of this month; though, confidence in the significance of this rain is also still low.  From a technical perspective, the next level of resistance for the nearby March contract sits at Tuesday’s contract high of 5.41.  The contract is down 1-1/2 cents this morning to 5.32-3/4 and has a bearish target sitting at gap support at 5.17-1/4 left from Wednesday’s trade.  The dollar was up overnight and is building a base of support after resuming a downtrend the past 2-1/2 months.  Other outside markets, like stock index futures and crude are lower this morning.  In corn, Managed Money has grown their net long position to an estimated 428,000 contracts.

SOYBEANS

Soybean futures traded a 20 cent range overnight on both sides of Thursday’s settlement prices.  March beans are down 11 cents to 14.19-1/2 after falling short of making new contract highs.  Positive momentum has slowed heading into the weekend with overbought stochastics signaling some caution to bullish technical traders.  The bean complex will be subject to some down days ahead which is commonplace for a demand driven bull market.  We’ll get a NOPA Crush report later this morning.  The U.S. soybean crush likely rose in December to the second-highest level on record for any month, capping the busiest year of processing ever for the industry…185.175 million bushels is the survey estimate.  The previous record annual crush in 2018 saw NOPA members handling 1.971 bil bu.  Soyoil supplies among NOPA members at the end of December were seen rising for a third straight month to 1.712 billion pounds compared with 1.558 bil at the end of November and 1.757 bil at the end of December 2019.  If realized, the stocks would be the largest in six months.  Heading into today, Managed Money was seen net long an estimated 236,000 bean contracts, 110,000 lots of soymeal; And, 111,000 soyoil.

WHEAT

Wheat futures were higher overnight and have become the leader of forging new contract highs in the rally in grains and oilseed complex.  March Chicago wheat advanced 20 cents to a new contract high of 6.93.  Managed Money is now net long more than an estimated 40,000 SRW contracts.  March KC wheat hit a new high of 6.60 on gains of 23-1/2 cents.  And, Mpls wheat peaked at 6.52-1/4, up 11 cents.  The complex has built up a head of steam using the corn and bean rally as a springboard, while getting a boost from demand prospects amid a downtrend in the dollar and Russia’s taxing of wheat exports.  Ukraine’s grain exports have fallen 18% to 27.2 million tons so far in the season, which runs from July 2020 to June 2021, economy ministry data showed.  Technically, winter wheat contracts have reached an RSI of over 70 which is an overbought condition, but look headed for $7.00.

CATTLE

Cattle market calls are mixed.  Strong selling pressure in the front months has been linked to steady to weaker cash and technical selling.  Deferred contracts maintain their overall strength while forging new contract high closes.  Cash trade is mostly complete with some clean up trade at $109-111.   Feeders face headwinds from strong grain markets.  Slaughter is estimated at 120,000 head and the market seems to have ample supplies available.   Carcass values finished higher, keeping pace with a strong week.  Choice carcasses up 2.37 to 213.37 and Select gained 2.01 to 201.07.   We view the Choice/Select spread may be starting to widen.  The overall cattle market is still trending higher, but selling pressure on the front month has the market testing support levels and the 100-day moving average.  

HOGS

Lean hog futures are called mixed as the nearby Feb contract, at 66.30 continues to struggle with large supplies and heavy production.  Weekly export sales were firm at 23,800 MT, however, China’s lack of buying may have spooked the market.  Heavy production and available hogs for slaughter also  weigh on the market.  Estimated slaughter at 497,000 for Thursday, steady with last year.  Deferred contracts are building a strong up-trend, challenging or establishing new highs.  Higher grain (feed) prices’ impact on potential hog expansion continue to be viewed as long-term supportive on futures.   Pork carcasses softened by the close from mid-day, but finished the day 2.42 higher to 80.55 with a soft load count of 288 loads.  The Lean hog index closed .99 higher to 65.48 while trending higher and trading .82 under February.

Author

Matthew Strelow