Corn: Corn futures finished 2 to 2 1/2 cents lower through the December contract. Corn futures were influenced by weakness in the wheat market today. But while wheat futures finished high-range, corn could only muster a midrange close. With beans ending higher and high-range for the day, corn turned in the worst performance in the grain and soy markets. While that’s disappointing to bulls, the corn market continues to go nowhere, holding in its sideways range. Focus the final two days this week will be on USDA’s Ag Outlook Forum. Some of USDA’s initial projections for the 2020-21 marketing year will start to hit the market tomorrow, though the full new-crop balance sheets won’t be released until early Friday morning.
Soybeans: Prices fell to a four-session low and closed higher, halting a two-day drop. May soybeans rose 3 ¼ cents to $$9.05 1/2. November closed up 1 ¾ cents to $9.23. Prices fell to early lows after the Brazilian real fell to a record low against the dollar, increasing the competitiveness of Brazilian soybeans on the world market. However, U.S. export prices are competitive compared with Brazilian offers from August into the fall months but not before. Funds were late buyers, covering short positions in case China turns a buyer of new-crop beans next month when tariff exemptions are released for Chinese crushers. Prices began to bounce off session lows at midmorning. The morning weather forecasts call for much wetter for north-central Brazil and drier for Argentina the next 10-days. The forecasts raised concerns about a quick Brazil harvest and potential curbs on Argentina yields if its stays dry into end of the March.
Wheat: March SRW wheat futures closed down 1 1/2 cents at $5.65 1/4 and the May contract was off 2 1/2 cents at $5.62 1/2. March HRW futures ended the session off 6 cents at $4.79 3/4 and the May contract was 6 1/4 cents lower at $4.86 3/4. Spring wheat futures fell 1 3/4 to 3 3/4 cents. The wheat futures markets today saw normal, corrective price pullbacks after scoring the biggest gains in eight months yesterday. Gains Tuesday pushed prices to three-week highs. A surging U.S. dollar on the foreign exchange market recently also gave the grain market bulls pause today.U.S. wheat traders are also hopeful for more demand coming from China. That nation this week announced nearly 700 items that are eligible for waivers beginning on applications that can be submitted on March 2 and may lead to purchases of U.S. wheat, even if it is to put into storage.
Cotton: March cotton futures closed up 61 points at 68.48 cents today. May futures gained 78 points to close at 69.65 cents. Prices closed near mid-range after hitting three-week highs earlier today. An uptick in trader and investor risk appetite at mid-week allowed global stock markets to rebound, and that spilled over into buying support in the cotton futures market today. U.S. stock indexes are at or near record highs. Asian stocks rallied Wednesday on reports China is considering direct cash injections and mergers to bail out its airline industry, which has been seriously hurt by travel restrictions caused by the coronavirus outbreak. China’s central bank has also taken other stimulus measures to protect the world’s second-largest economy.
Hogs : Hogs closed with modest to strong gains, confirming the reversal action on Tuesday. April hogs rose $2.075 to close at $67.575 with June up $1.80 to $83.175. Futures finished off the daily highs on weakness in midday wholesale pork prices. The pork cutout value fell $1.73 this morning led by declines in all cuts but picnics and ribs. Slaughter this week is running 6,000 head below last week but 65,000 head, or 4.6%, above a year ago. Slower slaughter rates are starting to develop and that will provide a floor of support under cash and futures before the strong seasonal summer months. News that China will begin formally processing some tariff-free U.S. pork import licenses continues to provide support to the hog futures. Traders still want to see a big jump in new sales. And one question we’ll never know is just how much protein demand was permanently lost due to coronavirus hitting just as they were celebrating their Chinese New Year. Tyson shares fell today after announcing that they are seeing slowdown in demand.
Cattle: Live cattle futures saw a choppy day of trade and the market ended anywhere from 12 ½ cents lower to 35 cents higher, with most contracts favoring the upside. Feeder cattle spent the bulk of the day in positive territory and settled 47 ½ to $1.475 higher, with nearbys leading gains. Talk that packers are short-bought and pulling ahead cattle sparked hopes for higher cash cattle action this week. The fact that February futures are trading at a premium to the April contract speaks to higher expectations. And the market got some confirmation of higher trade ahead of today’s close. Texas saw a few thousand head of cattle trade around the $120 mark today, up $1 from action last week in the state. This morning, Choice and Select values softened another 14 and 50 cents, respectively, but movement did pick up to 100 loads.
Corn: Corn prices rallied more than a nickel, bouncing away from key technical support tested on Friday. March corn rose 5 ¼ cents to $3.83 and December corn futures rose 4 ½ cents to $3.93 ¼. Prices rebounded today after China announced exemptions on retaliatory duties imposed against 696 U.S. goods, including corn, DDGs and ethanol. This is the most substantial tariff relief to be offered so far, as Beijing appears to be working to fulfill commitments made in its interim trade deal with the United States. Applications for one-year waivers will be accepted from March 2. The ministry will approve application within three working days. Overall, corn export demand remains routine and needs to improve quickly and sustain an upturn for several months to sustain rallies. The USDA annual Outlook Forum starts on Thursday in Washington and carries on through Friday, and the trade is hoping for a bit more clarity on the Chinese ag buying into the 2020-21 season.
Soybeans: May soybean futures closed down a penny at $9.02 1/4. May soybean meal futures rose $1.00 at $297.60 and May soybean oil futures fell 10 points at 30.84 cents. Price action overnight saw gains on China’s move to increase tariff exemptions, but soybean traders remain skeptical China will be buying many U.S. soybeans with a record crop getting harvested in Brazil and prices there below U.S. export values. AgRural raised its Brazil soybean production forecast to 125.6 MMT, and South American Crop Consultant Dr. Michael Cordonnier raised his production estimate to 125 MMT. Given early harvest reports and weather forecasts, there is no reason to argue those numbers. Cordonnier also raised his Argentine soybean crop estimate by 1 MMT to 54 MMT. Brazil exported 1.21 MMT of soybeans in the week ended Feb. 14, up from the previous week’s 955,000 MT but 254,000 MT less than a year ago, according to Global Trade Service data. Still, new-crop export commitments were estimated to be 11.88 MMT, a record for this date and up 23% from a year ago.
Wheat: Wheat futures surged to open the week, led higher by SRW contracts that ended 20 1/2 to 24 cents higher through the December contract. HRW contracts finished 20 to 21 cents higher, while HRS futures firmed 13 to 14 cents in most contracts. Australia trimmed its 2019-20 wheat crop estimate to 15.2 MMT, down around 700,000 MT from its December forecast and the smallest in 12 years. While the cut wasn’t major, private crop forecasters say the official estimate from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) is still too high. ABARES didn’t update its export estimate, though private sources say the country will likely ship around 7 MMT to 7.5 MMT of wheat in 2019-20, down from 9 MMT in 2018-19. That helped spark ideas of potentially greater U.S. wheat exports. Also supportive were reports that China will start accepting tariff waiver requests for 696 U.S. products, including wheat, that are currently subject to retaliatory tariffs imposed by Beijing. That sparked ideas Chinese demand for U.S. wheat soon could start increasing.
Cotton: Cotton futures pushed higher in the early hours of trade, but the market backed well off its highs by the close, settling 30 to 46 points higher for the day. Cotton futures enjoyed followthrough buying early in the day, but the market pared much of its gains by the close. Followthrough selling tomorrow would be a worrisome signal. Over the weekend, the National Cotton Council projected farmers would plant nearly 13 million cotton acres in 2020-21. While down 5.5% from year-ago, that was not nearly as much of a drop as some anticipated. The group also projected a slight dip in cotton exports, despite continued strength in both sales and shipments.
Hogs: April lean hog futures closed up $1.20 at $65.50. June hogs gained $0.475 at $81.375. Lean hog futures traders today decided to focus more on some positive cash market fundamentals. The solid hog slaughter level Monday suggests packers continue to make good money and will want to continue to move the product out the door. There are also notions China’s frozen pork stocks are getting depleted and will need to be replenished, which could lead to better weekly U.S. pork export sales numbers in the coming weeks. However, thousands of containers of frozen pork, chicken and beef are piling up at some major Chinese ports as transport disruptions and labor shortages slow operations, people familiar with the matter told Bloomberg. China is considering making some purchases of U.S. agricultural goods by early March as a way to show it’s still committed to its phase one trade deal, Bloomberg reported.
Cattle: Live cattle closed higher and in the top 25% of the daily price range after trading lower at midsession. April cattle rose 37.5 cents to $120.70 and June cattle rose 32.5 cents to $112.325. April feeder cattle rose 40 cents to $141.775. Cattle futures extended last week’s late rally after a mixed start this morning. It looks like fund selling exhausted itself early last week and futures have responded with solid gains. Friday’s CFTC Commitment of Traders report showed funds cut almost 18,300 long contracts, to 36,962 futures and options as of Feb. 11. That’s down from more than 90,000 net-long positions three weeks earlier. The past four days of gains reflects new fund buying. However, midday boxed beef prices showed Choice fell 86 cents and Select declined $1.60, erasing some of last Friday’s gains. A higher weekly close this week would confirm a seasonal low in beef and cattle prices. Beef sales remain robust and a long-term positive for the 2020 cattle outlook.
Corn: Following a two-sided day of price action, corn futures finished low-range with losses of 1 3/4 to 3 1/4 cents through the December contract. For the week, March corn futures dropped 5 3/4 cents. The poor close today means bulls will likely have to defend support at the winter lows early next week. If they can’t, futures could make a run at the contract lows from last fall. If the winter lows hold, it wouldn’t be surprising to see a round of fund short-covering. But the upside is limited barring fresh bullish news. Much of Brazil’s safrinha corn crop is going to be planted after the ideal window closes. That elevates risk of dryness during pollination and filling, but it doesn’t guarantee lower yields. Given that most of the crop will be planted into wet soils, risk of a disastrous second crop are likely low.
Soybeans: Futures ended lower, paring its second straight weekly gain. March soybeans fell 2 ½ cents on Friday to $8.93 ¾ but still up 11 ¾ cents this week. November fell 1 ¼ cents today to $9.22 ½ and up 4 cents this week. March meal gained $1.80 this week to close at $291.20. March soybean oil fell 40 points this week to close at 30.57 cents. Soybeans moved higher this week after USDA raised in annual export forecast 50 million bushels and cut the ending stocks by the same amount based on stronger sales to China as part of the Phase 1 trade deal. Traders will be watching for more business in the weeks ahead to sustain the rally as China tariffs will be reduced slightly today. USDA’s initial U.S. projections for the 2020-21 marketing year will be released at the Ag Outlook Forum Feb. 20-21. The new-crop U.S. balance sheets could better reflect expected Chinese demand under the two-year trade agreement.
Wheat: SRW wheat futures saw two-sided action today before settling mid- to low-range and down 1 ½ to 3 ½ cents. HRW and HRS wheat futures saw similar price action and closed steady to 1 ¼ cents lower. March SRW wheat futures finished 16 cents lower for the week. USDA’s Ag Outlook Forum takes place Feb. 20-21, which includes new updates to the 2020-21 long-term supply and demand tables. Commentary from the event could shed some light on how the department expects recent trade deals with China, Japan, Mexico, Canada and South Korea to impact the balance sheet. The National Weather Service will also update its 30- and 90-day forecasts next week, providing some clues as to how spring planting might play out.
Cotton: Cotton futures posted losses of 22 to 34 points through the December contract. For the week, March cotton futures dropped 34 points, which was today’s decline. The National Cotton Council holds its annual meeting this weekend, at which it will release results of its acreage survey. Those results will help guide price action early next week. USDA’s long-term projections, which are used mostly for budgetary purposes project a 1.7-million-acre decline in cotton plantings this year. The market will get a better expectation for USDA’s acreage forecast late next week when it releases its initial 2020-21 balance sheets at the Ag Outlook Forum. Certificated cotton stocks tightened under 6,000 in late January but have rebounded to more than 32,000. That limits chances for a short squeeze in March futures during delivery.
Hogs: Hog’s ended mixed Friday and lower this week. February expired at $55.90 today. April futures were up 22.5 cents to $64.30, paring the weekly drop to $1.95. June hogs slipped 12.5 cents today to $80.90, down $1.65 for the week. Cash hogs opened mixed Friday with some buying interest developing and closed lower for the week. Wholesale pork prices were slightly weaker at midday with loins, ribs, and bellies all lower. Pork and hog prices are likely setting seasonal lows as supply begins to taper. Slaughter this week fell 3.5% to an estimated 2.596 million head from 2.691 million a week earlier. Slaughter was up 4% from a year ago. Pork exports in the week ended Feb. 6 remained strong at 94.5 million lbs., or more than double last year. Sales to China remained slow after record sales to end 2019. But 30% of total U.S. exports were shipped to China last week.
Cattle: Cattle futures pulled back from session highs, but still closed the week on a strong note. Live cattle posted gains of 92 1/2 cents to $1.80 through the December contract. Feeder cattle finished $2.15 to $2.425 higher through the November contract. For the week, April live cattle futures firmed 52 1/2 cents to $120.325 after earlier in the week dropping to the lowest level in nearly five months. April feeder cattle firmed $3.875 this week. Technical price action late this week suggests the cattle market has put in a low following an extended round of heavy fund liquidation. Followthrough buying next week would confirm a low. Since the cattle market likes to post dramatic lows (and highs), it wouldn’t surprise us to see additional buying next week. After funds actively cut long positions, they may be ready to rebuild their length.
Corn: Futures end the day near session lows with March sliding 3 ½ to $3.79 ½ and December falling 1 cent to $3.92. Corn futures drifted lower on light fund selling amid a lack of fresh news. This morning’s weekly USDA export sales report held few surprises with private exporters reporting net new sales fell 22% to 968,800 MT from a week earlier and were 9% below the prior four-week average. Current crop-year sales reached 935 million bu., down 336 million bu. from a year ago or 26%. The market remains concerned about Chinese demand for U.S. corn after USDA failed to make any changes in China’s import forecasts earlier this week. China is expected to open their markets by issuing duty-free import licenses or reducing tariffs, which could come as early as next week. But for today, traders were more concerned that the coronavirus outbreak in China will curb economic growth and corn demand throughout Asia.
Soybeans: March soybean futures closed up 4 cents at $8.96 1/4 and touched a more-than-two-week high today. March soybean meal continues to languish and closed up $0.20 at $291.90. March bean oil closed down 32 points at 30.72 cents. Short covering and some perceived bargain hunting were featured today as prices are slowly climbing up from the February low. Trading is also cautious ahead of the Feb. 14 start of the U.S.-China trade deal and the U.S. trading holiday on Feb. 17. It will be tough for market bears to hold shorts into the long weekend and possible release of lower tariffs to make U.S. soybeans more competitive. China has yet to inform Washington of any delays or reductions to planned purchases of U.S. agricultural goods under the Phase 1 trade deal due to the coronavirus, USDA Under Secretary of Trade Ted McKinney said on Wednesday.
Wheat: Wheat futures finished 3 to 5 cents lower. March HRW contracts led the price declines, but other contracts weren’t far behind. Funds continued to exit long positions in the winter wheat market, despite weekly export sales that were up sharply from week-ago, slightly above the four-week average, and at the top end of trade expectations. With funds still long, there is risk of additional near-term liquidation pressure barring strong bullish news. Export sales for the week ended Feb. 6 totaled 643,100 MT for 2019-20 and 44,000 MT for 2020-21. Traders expected combined sales between 300,000 MT and 700,000 MT. HRW and HRW sales were solid at 294,200 MT and 197,700 MT, respectively. But SRW sales were light at just 11,700 MT. Weekly exports of 506,300 MT were also up sharply from week-ago and the four-week average.
Cotton: March cotton futures closed down 83 points at 67.75 cents today, while December futures lost 48 points at 69.34 cents. Once again, cotton futures traders were rattled today after China adopted a new testing method and announced on Thursday a big jump in coronavirus outbreaks and more deaths. The rising virus toll boosted worries China is hiding more details. Traders are more skeptical whether China can or will meet its ag buying commitments in 2020. The spike in coronavirus numbers came a day after markets were cheered Wednesday when China reported its lowest number of new cases in two weeks. Export demand for U.S. cotton continued to improve in the latest weekly USDA export sales report, out this morning. Exporters sold 350,900 bales in the latest week, a new marketing-year high. Vietnam, Turkey, Pakistan and Bangladesh purchases offset reductions by China.
Hogs: April lean hog futures closed up $0.30 at $64.075, while the June contract gained $0.175 at $81.025. Short covering was featured in lean hog futures today as the bulls try to stabilize prices following the late-January downdraft. Weekly U.S. pork export sales slipped to 28,600 MT last week from 29,500 MT a week earlier. China bought 3,700 MT, the third biggest buyer after Mexico and Japan last week. Shipments remain active at 42,900 MT last week with Mexico taking 13,100 MT and China shipping 13,000 MT. While USDA did hike its 2020 pork export forecast by 275 million lbs. in Tuesday’s monthly supply and demand report, it did not specifically attribute the uptick to China. Today’s midday pork report showed carcass cutout value down $1.10, led by a drop in bellies. Movement was 155.5 loads.
Cattle: Cattle opened lower and tested short-term support before rallying late to close higher, near session highs. April cattle rose 67.5 cents to close at $118.525. March Feeders cattle rose $1.275 to $136.325. Cash cattle continues to trade down $1 to $2 from last week and midday beef prices were mixed with small gains reported for Choice. Sales did show some improvement this morning and confirmation of bigger business in tonight’s report would be the sign that grocers, food service companies and perhaps overseas buyers are stepping up purchases ahead of the seasonal rebound in values.Some traders see China returning to the U.S. markets next week. Beef, pork and soybeans are expected to top their list of imports and speculators want to hold longs in anticipation of new buying. China has dire food shortages developing amid the outbreak of coronavirus and the devastation to the hog herd from African swine fever.
Corn: March corn futures closed up 3 1/4 cents at $3.83 and December futures were up 1 cent at $3.93. The futures market was supported today on light farmer sales recently, firm cash basis levels and some concerns about saturated U.S. soils that may once again create a planting season of problems. Also, Chinese and U.S. officials are still saying they can meet their trade-agreement purchase commitments despite the outbreak of the coronavirus in China. The market needs a fourth week of good U.S. corn sales in Thursday morning’s weekly USDA export sales report to make another run at the upside. The trade is looking for current marketing-year sales of 700,000 to 1.2 million metric tons, and new marketing-year sales of zero to 100,000 MT.
Soybeans: Soybean futures finished 2 to 7 3/4 cents higher through the November contract, with the front-month March contract leading gains. Meal futures ended 80 to 90 cents higher, while soyoil futures closed 31 to 32 points higher. Soybean futures traded on both sides of unchanged today, but a late wave of buying resulted in a high-range close. That sets the table for followthrough buying, though it’s likely going to take supportive news to fuel active buying. Funds hold big net shorts in soybeans and the soy meal, but without a bullish catalyst, there’s little incentive to actively cover shorts. A candidate for potential supportive news would be USDA’s weekly export sales data. For the week ended Feb. 6, traders expect sales between 600,000 MT and 1 MMT.
Wheat: Winter wheat futures turned higher during the day trading session and the market settled high-range with gains of 2 ¼ to 5 ½ cents for the day. HRS wheat futures faced pressure for much of the day and finished midrange and steady to fractionally lower. An early move to new lows for the month spurred some corrective short-covering today, as traders recognize there is already the potential for some supply-side concerns in the United States. Soils are saturated in many areas of the Northern Plains, crops are still in fields, and more wet weather is headed for the region. And several weather watchers say the Midwest and northeastern Plains could be headed toward a cool, wet spring. Already, concerns are mounting about the possibility of another slow planting season and possibly even lost acres. State updates signal the winter wheat crop has not over-wintered well, and winterkill may be a threat to crops in the Upper Midwest and northern Plains the next two days.
Cotton: Cotton closed higher, erasing early losses. March cotton formed a bullish outside day up reversal. March futures rose 35 points to 68.58 cents and December futures closed 51 points higher at 69.82 cents. Cotton futures reversed Tuesday’s losses tied to negative forecasts from USDA’s monthly supply and demand report. Much of that buying was tied to speculation Thursday’s weekly USDA export sales report will show continued strong new business and active shipments. The agency increased its estimates for global ending stocks for the 2019/20 crop year on Tuesday, citing larger production and lower consumption.
Hogs: Hog futures opened lower and closed mixed, with most of the weakness in the front four months. April hogs fell 45 cents to close at $63.775 and June was down 12.5 cents to $80.85. Prices continued to weaken today in the front futures contracts. Wholesale pork cutout values were unchanged at midday with few changes in the primal cuts. Sales remained slow. Cash hogs continued to soften. Back months rallied on Chinese pork demand optimism. China has not informed the United States of any delays or reductions of its planned purchases of U.S. agricultural goods under the Phase 1 trade deal due to the outbreak of coronavirus, U.S. Department of Agriculture Under Secretary of Trade Ted McKinney said on Wednesday. He said he hoped China would consider additional tariff relief to help it meet its purchase commitments but had no indication Beijing would do so.
Cattle: April live cattle futures gained $0.675 at $117.85 today, closing near the session high after touching a four-month low early on. March feeder cattle futures closed up $0.375 at $135.05 and near mid-range. Some short covering was featured in the cattle futures today. Gains were limited by cash cattle trade coming in slightly lower yesterday, and beef prices also retreating. Light cattle trade $1 to $2 lower from action the week prior and in line with futures. The product market has been struggling, with prices sliding and lower prices failing to spark demand. Choice grade beef fell another $1.15 on Wednesday and Select gained 85 cents, narrowing the Choice-Select grade spread to just $1.30, a negative signal. Movement was again lackluster at 88 loads.
Corn: Corn futures ended lower and in the bottom half of today’s ranges. March corn fell 2 cents to $3.79 ¾, and December was down 1 ½ cents to $3.92. U.S. carryover for 2019/20 is unchanged from last month at 1.892 billion bu. The forecast was 36 million bushels above the average trade guess of 1.856 billion bushels. There were two large adjustments to the balance sheet which were offsetting. USDA increased its ethanol use forecast by 50 million bushels while simultaneously lowering the export forecast by 50 million bushels. USDA made no mention of potential sales to China in its corn discussion. USDA left its feed use forecast unchanged at 5.525 billion bushels despite increasing its forecasts for pork, beef and broiler production. USDA may have to raise its feed and residual use in April after the March 31 stocks report which may also include an update on corn lost or still left in the fields. USDA left its cash price forecast unchanged at $3.85.
Soybeans: Soybean futures saw two-sided action today before settling in the upper half of the daily trading range and steady to fractionally higher. Soymeal futures closed 20 to 60 cents lower, while soybean oil posted gains around 10 points for the day. USDA slashed soybean carryover 50 million bu. from January, in a nod toward and uptick in shipments of soybeans to China as part of the Phase 1 trade agreement. The market had expected a 32 million-bu. cut. This helped the soybean market to eke out minor gains for the day, though a 2.19-MMT jump in global carryover tempered gains. USDA hiked its Brazilian soybean crop estimate by 2 MMT to 125 MMT. While estimates for the region are climbing, few expected USDA to get as aggressive as it did. This morning, Conab raised its Brazilian soybean crop estimate by 1.024 MMT, pushing its production estimate to 123.25 MMT. South American Crop Consultant Dr. Michael Cordonnier upped his bean crop estimate to 124 MMT today.
Wheat: The markets closed at the lower end of today’s ranges. March SRW fell 10 cents to $5.42, March HRW was down 4 ¼ cents to $4.68 ¼ and March Spring wheat fell 2 ½ cents to $5.31 ¼. Fund liquidation increased today across the wheat markets after USDA did not cut its estimate of world wheat carryover as some expected today despite raising its trade forecast. In fact, the agency reduced global use, mostly in response to lower feed consumption. The market was also pressured by Egypt buying about 360,000 MT of wheat from Romania and Russia as lower prices than expected. That’s a possible sign that export competition is going to be intense until weather problems develop in the Northern Hemisphere this spring. USDA lowered its old-crop wheat ending stocks forecast by 25 million bu. from last month; that’s 14 million bu. more of a reduction than traders anticipated
Cotton: March cotton futures closed up 4 points at 68.23 cents today, while December futures gained 6 points at 69.31 cents. Both contracts closed near mid-range. Today’s monthly USDA supply and demand report was given a bearish read for the cotton market, and the fact that futures prices eked out slight gains is encouraging to the bulls. USDA made no changes to the supply or demand sides of the U.S. cotton balance sheet versus last month. Traders expected USDA to trim ending stocks by 90,000 bales. USDA did, however, lower the national average on-farm cash cotton price projection by a penny, to 62 cents per pound. For 2019-20 global carryover (without China), USDA forecast 48.38 million bales--up from 46.85 million bales in January, and compares with 44.32 million bales in 2018-19.
Hogs: April lean hog futures closed down $0.85 at $64.225 today and near the session low. The bulls have faded early this week after last Friday’s technically bullish weekly high close. sis: In today’s monthly supply and demand report, USDA raised its U.S. pork export forecast for 2020 by 275 million pounds, but it made no direct reference to increased Chinese demand, noting only “expected robust global demand.” Traders this week are focused in part on the continued high hog slaughter levels so far this year. Kills are up 6.3% so far this year, but slaughter rates show start to recede soon.On the positive side, it is still very likely China will need to boost imports of U.S. pork to reduce shortages and curb prices currently near last year’s record highs.
Cattle: Cattle and feeder cattle closed lower and near session lows. April cattle fell $1.50 to $117.175 and March feeder cattle were down $1.025 to $134.675.: Cattle opened lower and pushed lower throughout the session on increased long liquidation and new selling as April fell to the lowest since September. Cash trading started at $120 in Colorado today, about $1 lower than last week with most bids still holding near $121. Choice cutout value dropped 50 cents to $208.41, which is just above the January low at $208.25. Beef prices historically make their lows in February, but traders are worried it may be later this month rather than now because of larger slaughter supplies this year and heavier market weights that have pressured chuck primal prices and beef trimmings. The good news is the Choice/Select spread appears to be bottoming and any signs of reduced market-ready cattle supplies will turn the market back to the upside for a seasonal rally into April.
Corn: March corn futures closed down 1 3/4 cents at $3.81 3/4 and December was off 1/2 cent at $3.93 1/2. Today’s price action saw some spreading and position evening ahead of Tuesday morning’s monthly USDA supply and demand report (WASDE). USDA’s chief economist said last week that its monthly supply and demand estimates would factor in the broad goals of the U.S.-Chinese trade deal but not the details of Chinas purchase commitments. That may curtail any major changes in USDA export forecasts. Today’s weekly USDA export inspections report showed good U.S. corn shipments, with a marketing year high of 769,390 metric tons. The next 8-12 weeks will likely see a ramp-up in U.S. corn shipments, based on seasonal analysis.
Soybeans: Soybean futures finished 3/4 to 2 1/4 cents higher through the November contract, though that was midrange on the day. Meal futures gained $1.70 to $1.90 through the July contract. Soyoil futures ended 33 to 35 points lower through the July contract. Funds covered short positions in the soybean and meal markets today after extending their short positions in those markets last week. With funds heavily short soybeans and record-short soymeal, there’s potential for more short-covering. But to trigger an extended period of fund buying, some bullish news likely needs to surface. Focus tomorrow will squarely be on USDA’s WASDE Report, as this will be the first demand projections since the Phase 1 trade deal with China was signed. We don’t anticipate any major adjustments to soybean exports this month.
Wheat: March SRW wheat futures closed down 6 3/4 cents at $5.52 today and closed at a seven-week low close. March HRW wheat futures finished steady at $4.72 1/2. Spring wheat futures down about 2 cents. The losses in SRW futures today were likely due in part to spreaders liquidating some longs as the speculative funds had a larger long position in SRW futures and options than was expected. In the week ended Feb. 4, the funds’ net-long position in SRW wheat futures and options rose to 52,161 contracts from 48,469 a week earlier and the most bullish position since August 2018. Wheat prices today saw some pressure from sliding export prices of Russian wheat that fell last week for the second consecutive week as competition with other major wheat exporters has intensified.
Cotton: Cotton futures opened lower and closed near session highs. March cotton rose 44 points to 68.19 cents and December was up 39 points to 69.25 cents. The cotton market remains supported by underlying mill demand after the recent improvement in export sales. The market on Friday was disappointed there was limited new sales to China and ignored the biggest weekly sales since June 2018 last week. Current cotton shipments this season and undelivered sales are up 18% from a year ago. Total commitments represent 84% of the U.S. export target for the year and suggest USDA may raise its export forecast in Tuesday’s update. We are currently forecasting exports at 16.9 million bales, 400,000 bales above USDA estimate last month.
Hogs: Hogs failed to follow through on Friday’s strong gains and retreated Monday. April hogs closed down $1.175 at $65.075 with June down 30 cents to $81.25. Cash hogs and pork cutout values both moved lower last week, pulling packer margins down. It will be important to see prices quickly stabilize and move higher to maintain bullish momentum created last week. Slaughter last week rose 180,000 head above a year ago but down 12,000 head from a week earlier. Today’s kill was unchanged from last week and up 57,000 head larger than a year ago. Despite the larger slaughter, the midday pork cutout value rose $3.37, led by strong gains in bellies, ribs and hams. Sales were modest. The cash hog markets were also firmer, according to morning data from USDA. Cash still needs to lead despite signs Chinese demand for pork may start to improve.
Cattle: Live cattle futures got off to a rather disappointing start to the week, with futures facing pressure throughout the day and settling low-range and down 55 cents to $1.025. Feeder cattle saw two-sided action today before settling mixed. Cattle futures faced pressure to start the week, but market bears stopped short of forcing a challenge of last week’s lows. A lousy start for the boxed beef market soured traders’ attitudes. Choice boxed beef values dropped $1.02 this morning and Select firmed 10 cents; even more concerning, movement slowed to just 41 loads. The period leading up to Lent is not typically a particularly strong time for the product market, and this year unease about the global economy is also limiting buying. On the other hand, the coronavirus in China has disrupted the country’s meat processing abilities and some say this should translate to strong Chinese meat imports.
Corn: Corn futures finished 4 to 4 1/4 cents higher through the December contract. For the week, March corn futures firmed 2 1/4 to end at $3.83 1/4. The gains this week may not have been strong, but they were potentially important. The market got past the fear-laden trade of the previous week. Fundamentally, export demand has improved, signaling strong foreign buyer interest on price breaks. More supportive export demand news is likely needed to build on the modest gains next week. Tuesday’s Supply & Demand Report will feature USDA’s first analysis of potential Chinese demand tied to Phase 1 of the trade agreement. But USDA analysts haven’t seen specific commodity details and we don’t anticipate there will be much if any impact on the export forecast this month. In fact, it wouldn’t surprise us if USDA lowered its 2019-20 corn export forecast. The average pre-report trade estimate calls for a 28-million-bu. reduction in corn ending stocks, which seems optimistic.
Soybeans: March soybean futures rose a penny Friday to close at $8.82. Prices did close at a technically bullish weekly high close today, and for the week March beans gained 9 1/2 cents. March soybean meal futures closed up $1.10 at $289.30 after hitting a contract low Thursday. For the week, March meal was down $1.70. March soybean oil futures on Friday lost 27 points at 30.97 cents, and for the week gained 103 points. Main bearish elements for the soybean market continue to be worries about limited Chinese demand for U.S. soybeans in the near term, with a record crop starting to be collected in Brazil and reports China bought upwards of 20 cargoes of Brazil soybeans this week. However, the positive comments from White House on working with China on coronavirus and China’s Xi assuring President Trump of his commitments under the Phase 1 trade deal have to trigger some fund short covering in soybean futures. The soybean market on Monday and Tuesday morning will be cautious ahead of the USDA WASDE report late-morning Tuesday.
Wheat: Winter wheat futures saw two-sided trade today, but the markets ultimately settled high-range with gains ranging from 2 ½ to 4 ¾ cents on the day. Spring wheat futures favored the upside and closed midrange with gains of 1 ¾ to 3 ¼ cents. March SRW wheat futures settled a nickel higher for the week Next week is a USDA report week, and preparations for and reactions to the data will share the spotlight with updates on the coronavirus. We do not expect USDA to make drastic alterations to its balance sheet as it incorporates the broad parameters of the Phase 1 trade agreement with China. On average, analysts polled by Reuters expect the department to trim U.S. ending stocks 11 million bu. from January, dropping carryover to 954 million bushels. Global wheat carryover is expected to edge 640,000 MT lower.
Cotton: March cotton futures fell 16 points to 67.75 cents, paring this week’s gain to 25 points. December cotton fell 26 points to 68.86 cents and up 13 points for the week. Cotton prices tested key support this week and rebounded on improving demand. The market is trying to carve out at least a temporary low. Further gains next week may depend on some positive news from the Feb. 11 USDA reports. Traders are looking for small cuts in both domestic and world ending stocks on Tuesday. Certificated stocks rose to 28,224 bales today, up sharply from a recent low of 5,917 bales on Feb. 4. The increase helped to cap gains late this week. Cotton export sales in the week ended Jan. 30 fell 4% to 332,300 bales from the marketing-year high a week earlier. Sales were still up 28% from the prior four-week average.
Hogs: April lean hog futures closed the session Friday up $1.375 at $66.25, to add to Thursday’s $3.00 daily-limit gains. Prices also closed at a technically bullish weekly high close Friday, which is one chart clue that a market bottom is in place. For the week, the April contract rose an impressive $4.65. Monday’s price action could see a pause after the solid late-week gains, or the bulls could continue to do some bargain hunting in a futures market that many hog traders think dropped too far, too fast. Friday’s noon pork report showed the carcass cutout value down 50 cents on decent movement of 233.76 loads. Picnics and ribs led the losses. Bellies and hams are going to need to lead a recovery in pork carcass cutout value. Big weekly hog slaughter numbers recently could dampen bullish enthusiasm and keep a lid on further big rallies in lean hog futures in the near term.
Cattle: Cattle closed mixed and feeders ended lower on Friday. April live cattle closed up 5 cents to $119.80 and up 12.5 cents for the week. March feeders fell 70 cents to $135.20 and down 87.5 cents for the week. For the first time in 12 sessions, open interest did not decline Thursday when futures fell to new lows and closed higher. That’s a sign that the contra-seasonal drop in prices and the massive fund long liquidation cycle may have ended. April cattle closed higher for the week as cash cattle traded about $1 lower and beef cutout prices slumped about $5. Actual slaughter data for week ended January 25 showed the largest fed kill for the week since 2011. This week’s kill was 631,000 head, down 9,000 head from last week but still up 6,000 from a year earlier. Cash and futures may have established a temporary bottom but higher trends next will be needed to convince the bears.
Corn: Corn prices slipped to a three-week low and closed in the upper third of today’s range. March corn was down 1 ½ cents to $3.79 1/4 and December corn fell 2 ¾ cents to $3.89 ¾. Corn traded higher overnight after China announced it would slightly reduce tariffs on hundreds of U.S. products as of Feb. 14. The market ignored another week of strong export sales this morning. In the week ended January 30, exporters sold 1.248 million metric tons (MMT) of corn, up 1% from a week earlier and 57% above the prior four-week average with Mexico and Japan the top buyers. Corn fell to new session lows after USDA Chief Economist Robert Johansson said the Phase 1 details about Chinese purchase commitments from the last month’s deal will not be included in the agency’s WASDE report on Feb. 11.
Soybeans: Soybean futures saw back and forth trade through the day before settling midrange and mixed, with nearbys fractionally to 1 ¼ cent higher and deferred months fractionally lower. Soymeal futures also saw two-sided trade before closing 30 to 90 cents higher. Soyoil ended around 10 points lower, on increased meal/oil spreading. Soybean futures got a boost overnight from news China would cut previously imposed retaliatory tariffs on $75 billion worth of U.S. goods, but recognition that in practice this would only translate to a tariffs cut from 30.0% to 27.5% in soybeans caused the market to give back some of those early gains. Reports China scooped up roughly 1 MMT of South American soybeans this week also limited buying interest today. Harvest of a record-large crop is underway.
Wheat: Futures opened higher and closed near session lows. March SRW wheat futures fell 5 ¾ cents to $5.56 ¼ while March HRW futures end down 6 cents at $4.67 ¾. Spring wheat was down about 2 cents today. March SRW futures opened higher but stalled for a third day below the 20-day moving average. Futures closed on key support at the 40-day moving average. USDA’s weekly export sales report showed new wheat sales at the low end of trade estimates. Wheat export sales fell 48% from a week earlier to 338,600 MT last week. Wheat basis was softer today. Some forecasters are raising rainfall outlooks for parts of Europe and the Black Sea region this week.
Cotton: March cotton futures closed up 40 points at 67.91 cents today and near the session high. The cotton futures market this week is being supported by a booming U.S. stock market that has hit new record highs in the equity indexes, suggesting good demand for the fiber.Weekly USDA export data in the latest reporting week as also upbeat, showing U.S. cotton sales at 332,300 running bales (RB) in the current marketing year, which were down 4% from the previous week but up 28% from the four-week average. A step by China to reduce some tariffs on U.S. goods as part of a recent trade agreement with Washington also reassured the cotton market.
Hogs: February lean hog futures finished 60 cents higher. Deferred contracts ended up the $3 daily trading limit. As a result, the daily trading limit expands to $4.50 for Friday. The limit-up close in deferred lean hog futures today points to a higher open tomorrow. Hog traders reacted strongly to this morning’s weekly export sales data that showed some of the stronger Chinese demand the market has been awaiting. For the week ended Jan. 30, pork export sales totaled 29,455 MT, including 5,561 MT sold to China. Weekly pork exports came in at 42,894 MT, including 16,189 MT shipped to China. With China’s pork stocks dwindling and Beijing looking to calm food supply fears amid the coronavirus outbreak, a pickup in Chinese buying and shipments of U.S. pork seems likely.
Price action: April live cattle futures closed high-range and up 57 ½ cents at $119.75 today after hitting a four-month low early on. March feeder cattle futures finished midrange and up 22 ½ cents at $135.90. A soaring U.S. stock market that has this week hit more record highs in the equity indexes and implies good consumer demand for U.S. beef prompted some bargain hunting in the cattle futures market today, following recent losses.This morning’s weekly export sales update showed U.S. beef sales fell to 18,700 MT last week—the smallest in three weeks. There were no new sales to China. Today, the country cut tariffs to 30% from 35%. Leaders in both Brazil and Mexico’s meat sectors expect the coronavirus outbreak in China to lift demand for beef imports.
Corn: March corn futures closed down 1 1/2 cents at $3.80 3/4 today, while December futures lost 1/4 cent at $3.92 1/2. The global stock and financial markets on Wednesday responded favorably to reports scientists have developed an effective drug against the fast-spreading coronavirus that has weighed heavily many markets since the beginning of the year. That spilled over into some modest early price strength in the corn market. However, those gains could not be held as corn traders remain concerned the coronavirus outbreak may delay a surge in U.S. ag exports to China that have been expected from the Phase 1 trade deal that takes effect on Feb. 15. But traders are still waiting for China to issue duty-free corn import licenses for U.S. ag goods. U.S. ethanol production rebounded 52,000 barrels per day (BPD) to 1.081 million BPD last week. Inventories fell 770,000 barrels to 23.474 million barrels last week.
Soybeans: Soybeans closed slightly higher for a third session but down from early session highs. May soybeans rose ½ cent to settle at $8.93 ½ and November gained 2 cents to $9.20 ¼. Look for more choppy trading. Traders are less willing to be short with prices near eight-month lows. End-users are unwilling to chase a rally amid record-large South American crops that are in the making and uncertainty about the coronavirus outbreak on Chinese demand and world growth. U.S. farmers are tightly holding remaining 2019-crop supplies or forward contracting 2020 crop, waiting for promised Chinese demand under the Phase 1 trade pact and China’s expected issuance of duty-free import licenses. Volume was in retreat today amid the conflicting market factors. Until there is clarity surrounding China’s purchase of U.S. ag goods and whether the China’s experiment of restricting movement of 60 million citizens to control a virus is working, the market lacks a new trading focus.
Wheat: March SRW wheat futures closed up 4 3/4 cents at $5.62 and March HRW futures ended up 6 1/2 cents at $4.73 3/4. Spring wheat futures closed about 3 cents higher. The wheat market bulls regained some upside momentum at mid-week, as global stock and financial markets appear to have, at least for now, moved beyond the coronavirus outbreak that has afflicted thousands of Chinese citizens and has spread to 24 other countries. Reports that there may be a vaccine being worked on, or at least identifying drugs to mitigate the illness, appear to have assuaged the global marketplace for now. Higher European wheat prices today also helped to support the U.S. wheat futures markets.
Cotton: Cotton futures finished 7 to 16 points higher for the day, but that was near session lows. Cotton futures built off yesterday’s corrective gains, but traders remained cautious buyers as uncertainty with impacts from China’s coronavirus outbreak continue to hang over the market. Beijing has encouraged Chinese workers to return to work, but public transportation disruptions are making it difficult for some to return, which is cutting factory productivity, including at some textile mills. Until the coronavirus concerns calm, traders are likely to remain cautious buyers. USDA’s export sales figures for the week ended Jan. 30 will be the highlight of trade on Thursday.
Hogs: Lean hog futures ended mixed to mostly lower. February gained 35 cents to $57.10, while April fell 45 cents to $61.875. Prices opened higher but closed lower or near session lows. The market continues to be pressured by large slaughter. In the first three sessions, USDA estimates packers consumed 1.488 million head. While that is down 5,000 head from last week it was 73,000 head more than a year ago. Wholesale pork values inched 25 cents higher at midday on strength in hams and bellies. Sales were slow. Packers margins have narrowed to $26.75 a head, down from $41.65 last week, according to HedgersEdge.com. Next up is USDA’s weekly export sales report Thursday morning.
Cattle: Cattle futures got off to a firmer start today, but buying interest fizzled pretty quickly. Live cattle settled low-range and down 40 cents to $1.475. Feeder cattle posted losses of $1.55 to $1.825. Cattle futures attempted to move higher in early trade on reports about an effective drug against coronavirus, but followup reports indicating that may not be the case led to a reversal or paring of gains in many markets, cattle futures included. Traders have been disappointed by the product market’s performance of late, with boxed beef values sliding and load counts notably light the first two days of the week. This morning, Choice and Select boxed beef values were able to rise 51 cents and $1.11, respectively, and movement picked up a bit to 74 loads.