CORN

Corn futures were firm overnight at their respective 10 and 20-day moving averages heading into today’s USDA report scheduled for release at 11 AM central.  Managed Money is net long an estimated 283,000 corn contracts.  Dec corn is at 4.22, and March is up 2-1/4 cents to 4.26-1/4.  Argentina and Brazil’s first corn crop are beginning to pollinate with many believing final production could be lower than USDA Nov guesses.  USDA will likely keep production estimates about the same in today’s monthly balance sheet.  Trade estimates for U.S. corn ending stocks are 1.691 bil bu versus 1.702 bil in the November report.  Conab will also be out with their latest estimate of 2021 Brazil corn crop.  Trade estimates for this morning’s closely watched USDA weekly sales are 700,000 to 1.50 mil tons versus 1.371 mil last week.

SOYBEANS

Soybean futures rose 10 cents overnight to catch up with 10 and 20-day moving average price levels ahead of today’s USDA report.  For Jan beans, that area of price congestion is at 11.68.  Managed Money is net long an estimated 196,000 soybeans; 63,000 lots of soymeal, and; 113,000 soyoil.  Underlying market support stems from a drier South American long range weather forecast lowering final crops there, adding to U.S. export demand and lowering US 2020/21 corn and soybean carryout.  Most doubt USDA will change Brazil’s soybean crop in today’s report.  Trade estimates for U.S. bean ending stocks is 168 mil bu versus 190 mil in the November report.  Conab will also be out today with their latest estimate of the 2021 Brazil soybean and corn crop.  This morning’s USDA weekly soybean sales are estimated near 400,000 to 800,000 tons versus 407,000 last week.

WHEAT

Winter wheat futures are forming a near-term bottom after slumping near 10-week lows in Chicago since the end of November.  Chicago wheat saw follow-through strength overnight, advancing 12 cents to 5.95 to get back to the contract’s 10-day moving average.  Mar KC wheat was up a dime to 5.61.   Spring wheat contracts in MPLS were up a nickel.  A return to weakness in the dollar and rumors that Hong Kong bought U.S. wheat has helped to turn the tide, as well as row crops showing some strength.  USDA is expected to increase Canadian and Australian wheat crops in today’s report.  They could drop final 2021 Russia, Argentina and U.S. wheat crops from current estimates.  A successful Covid vaccine could also increase U.S. food demand late In 2021.  Trade estimates for U.S. wheat ending stocks is 874 mil bu versus 877 mil in the November report.  World ending stocks’ average estimate is 321.14 versus 320.45.  Trade estimates for this morning’s USDA Weekly Export Sales are 200,000 to 550,000 tons versus 446,000 last week.

CATTLE

Cattle futures are expected to see two-sided trade this morning after finishing mostly higher on Wednesday.  Dec cattle were pressured by lower cash trade, but deferred contracts found support from seasonal optimism.   Cash cattle saw more light development on Wednesday at $107 to 108/cwt, $2-3 softer than last week.  Choice carcass finished sharply lower 6.76 to 218.26 and Select down 3.77 to 201.65.  The drop in retails triggered strong movement with a 207 load count.  That strong product demand supported the market despite price drop.  Choice carcasses are now trading more than $20 off recent peak.  Feb live cattle are challenging support and 50% retracement of the rally from the end of October to Nov 10th.  In feeders, stability in the live market and an active cash feeder market is providing support.

HOGS

Lean hog calls are mixed after finding some follow through support after Tuesday’s close.  This was countered by continued cash weakness due to heavy supplies of slaughter hogs.  Tuesday slaughter was 496,000 head.  The CME Lean Hog Index was lower by .19 to 60 and is at a premium to Dec futures, which could limit some selling pressure with contract expiration on 12/14.  Retail values closed softer on Wednesday, down .52 to 77.60, but carcasses failed to hold afternoon strength.  Front month hogs remain technically weak after Feb gapped lower Monday and remains below that gap and below the 100-day moving average.  Weekly exports could set the tone for today.

Author

Matthew Strelow