CORN

Corn futures were up 4 cents overnight with Dec getting to within 3/4 cent of the $4.00 mark.  The contract is nearly 80 cents above the contract low posted in early August and is at its highest level since October of last year.  Corn planted acreage came in nearly 1 million  acres below the previous USDA monthly estimate on Friday, led by North Dakota’s 450,000 acre drop from the June estimate.  The 2020/21 marketing year carryout number is now projected to be 2.17 bil bu versus 3.3 billion in the June estimate.   Weekly USDA numbers this week will be pushed back one day due to the Columbus Day holiday today closing government offices.  To begin the week, Managed Money is long an estimated 184,000 corn contracts.

SOYBEANS

Soybean futures traded two-sided overnight within Friday’s higher trading ranges.  Nov beans are settling in between 10.50 and 11.00 after tacking on gains of nearly 45 cents last week capped by USDA’s 74 million bushel increase in expected export of the oilseed over the previous month.  2020/21 ending stocks shrunk to a projected 290 million bu, the lowest ending stocks number since 2016/17.  Prior to the USDA report there was talk that China has been an active buyer of US corn for April.   In addition, delays in Brazil soybean plantings could increase China buying US Feb soybeans.  Argentina and US south plains weather forecast remains dry.  Brazil could see rain, but amounts may be less than normal.  Heading into today, Managed Money is net long an estimated 258,000 soybeans;  85,000 lots of soymeal, and; long 88,000 soyoil.

WHEAT

Wheat futures were up 3 cents overnight underpinned by Covid19 that has driven strong demand for basic foodstuffs as well as posing logistical challenges to harvests and snarling supply chains.  The complex remains in an uptrend and the dollar, though firm overnight is in a short and long-term down trend.  Managed Money is net long an estimated 29,000 contracts of SRW wheat.  Wheat prices have hit their highest level in more than five years in reaction to scorching weather, concerns over food insecurity brought on by the coronavirus pandemic and the lockdowns put in place to fight it; extreme dryness and heat in the world’s breadbaskets, including Russia and the US are key factors in the price surge.  The Southern Plains are expected to receive little, if any precipitation over the next 6 to 10 days.  Temperatures are forecast to be above average for most of this week before calling to below average for the weekend and early next week.

CATTLE

Cattle calls are mixed.  Cash last week stayed relatively strong at $108/cwt and even $109 into the end of the week as sellers appear to hold the upper hand.  Futures are closer to fair value as we review historical basis levels.  In the weeks ahead, cash is going to need to continue to improve for futures to justify the $115 to $117 for February and April.

HOGS

Lean hog futures are called steady to higher, underpinned by a strong cash market that continues to trend higher.  Export sales, too, add support having reached their highest weekly total in a year.  China was the biggest buyer at 29,021 tons, confirming the shift in demand from following ASF was found in Germany.  Feb hogs closed at 70.55 on Friday and are poised to retest contract highs.  Seasonal tendencies for the contract suggest a bounce from mid to late October.  However, choppy conditions can be expected after Dec and Feb futures broke out to the upside, thus creating an overbought condition for the market.

Author

Matthew Strelow