CORN

Corn futures were down 8 cents overnight led by a drop in the bean complex.  For the week, March corn, at 5.16-1/4 is down 18 cents and back below the contract’s 10-day moving average for the first time since December 17.  The 20-day is situated at 4.98.  Dec corn is at 4.43, down 5-3/4 cents.  Trade estimates for this morning’s USDA Weekly Export Sales are 600,000 to 1.20 mil tons.  The weekly EIA Petroleum Stats report will be released today.  Weekly ethanol production is expected to down slightly from last weeks with another build in ethanol stocks expected from last week.  Yesterday, Informa estimated U.S. 2021 corn planted acreage at 94.2 versus 91.7 million previous and 91.0 last year and 89.7 in 2019.  This increase was probably justified. They are using a trend yield of 181.0 versus 175.8 last year and 167.5 in 2019. This suggests a crop of 15.658 bil bu.  The firm estimates Q1 and Q2 corn futures to average near 5.35 with a fall low near 4.85.

SOYBEANS

Soybean futures were down sharply overnight, losing 25 cents and dropping to 20-day moving average support for the first time since December 16.  For the week, in just four trading days, March beans, at 13.45 have lost 71-3/4 cents.  Nov beans were down 22 overnight to 11.46-1/2.   Recent rains across South American growing areas have resulted in upward revisions in some analysts’ estimates for Brazil’s soybean production to 133.0-135.6 mmt, thus creating overhead resistance for the soybean market.  The bottom line for the official weather outlook in most production regions is unchanged.  Conditions in Brazil will continue to be mostly good for crops with a few exceptions. The northeast will continue to be too dry through next Thursday.  An increased chance of rain will be possible in this area in week 2; though, more will be needed.  Some pockets in Parana, Santa Catarina, and northern Rio Grande do Sul may become too wet.  In Argentina, a difference remains between the most recent GFS model run and European Model runs.  Last evening’s GFS model showed significant rain in some pockets in Parana, Santa Catarina, and northern Rio Grande do Sul that have become too wet, and the European Model continued to show shower activity that would be unable to counter evaporation.  Confidence is high of it raining significantly in northern Argentina from this event.  Southern Argentina will be driest in week 1 of the outlook with rising crop stress; though, partial relief is likely in week 2.  Palmoil prices were softer overnight, easing from strength tied to concerns over flooding in Malaysia and Indonesia.  Trade estimates for this morning’s USDA Weekly Export Sales are 750,000 to 1.50 mil tons for old crop beans, 350,000 to 600,000 tons for new crop.

WHEAT

Winter wheat futures traded 16-1/4 cents lower in March CBOT to 6.44-1/2 overnight.  KC March was down 12 to 6.23-3/4.  March Mpls Spring wheat lost 11-1/4 cents to 6.24.  Like row crops, topping action is evident on the daily charts as prices withdraw from the pre-January Crop Report buying spree. Trade estimates for this morning’s USDA Weekly Export Sales are 250,000 to 600,000 tons for 2020-21, Zero to 50,000 tons for 2021-22.  Word that Russia will not limit wheat exports is offering resistance.  Russia will impose a 50 euro tax ($1.65 per bu) to wheat export prices after March 1.  A 25 euro tax will be imposed Feb 15.  So far the threat of export taxes have not dropped domestic prices the 10% that Putin desires.  This could still leave the door open for restrictions on exports.

CATTLE

Cattle futures are called mixed.  The cattle on feed report will be after the close today.  Cattle on feed on January 1 are estimated at 99.4% of year ago levels, placements at 97% and marketings at 100.6% of year ago levels.  Meanwhile, cash trade occurred mainly in the south at steady prices of $110 to $111/cwt.  Kansas sold large volumes mainly at $110, Texas from $110 to $111.  Light trade in the north was at $109.  Technically, April live cattle are showing signs of breaking through resistance drawn just below 120.  The contract etched a new high of 120.20 yesterday before closing at 119.95.  Feeders, meanwhile, are in limbo, trading mid-range as participants see how the feed markets shake out at multi-year highs.

HOGS

Lean hog futures are called steady to firmer after posting a new contract high in the June contract yesterday.  The contract got to 85.92 leaving the next upside target drawn at 86.52  April hogs saw prices push to their highest level since Oct 15. The trade will be monitoring an outbreak of African swine fever in the southern province of China’s Guangdong – the country’s first reported cases of the deadly disease in almost three months.  The outbreak occurred on a farm with 1,015 pigs, killing 214 of them, the Ministry of Agriculture and Rural Affairs said in a statement, adding that illegal transportation was the suspected cause.  A new form of African swine fever identified in Chinese pig farms is most likely caused by illicit vaccines, industry insiders say, a fresh blow to the world’s largest pork producer, still recovering from a devastating epidemic of the virus. Plus, China reported its first cluster of COVID-19 cases among workers in a meat processing plant, raising fears among local consumers who have until now mainly worried about the safety of imported foods.

Author

Matthew Strelow