Markets and government offices closed on Jan. 18 in observance of the Martin Luther King Jr. holiday. No Pro Farmer reports until Tuesday, Jan. 19.
Corn : March corn fell 2 3/4 cents to $5.31 1/2, paring a weekly gain of 35 1/4 cents. December corn rose 2 ¼ cents on Friday to $4.60, extending the weekly advance to 19 1/2 cents. Profit taking allowed nearby corn futures to pare strong weekly gains into the three-day holiday weekend. Gulf export prices remained strong. New-crop futures remained supported by the upcoming intense battle for U.S. acres. The export market is quiet with high prices curtailing interest. There were rumors that Argentina is considering a 3% increase on corn export taxes to 15%. Meanwhile, the Brazilian Cepea Index of domestic corn prices hit a record this week and that will be a big incentive for growers to plant as many safrinha acres as possible. Rains this week and more next week are great for soybeans but more will be needed for the second crop. Meanwhile in Russia, the government approved an export tax on corn at 25 euros per MT starting March 1, limiting supplies for the world market. Corn prices in China closed the week at a record $11.20.
Soybeans: March soybean futures closed the day down 13 3/4 cents at $14.16 3/4 but for the week gained 42 cents. March soybean meal futures finished Friday down $1.70 at $463.20, paring the weekly gain to $23.60. March bean oil fell 176 points this week to close at 41.85 cents. Friday’s price weakness is not likely to deter the powerful bulls as they continue to enjoy a strong price uptrend on the charts, with no early technical clues that a market top is close at hand. Look for more price strength next week, but with likely higher volatility on both the upside and downside. Today’s NOPA soybean crush of 183.2 million bushels was a bit lower than expected. Still, It projects the crush for the first four months of the crop year at 753.2 million bushels and up from 708.9 million last year. Weather in South American soybean regions will continue to be in focus in the coming weeks. Right now, the weather leans negative.
Wheat: March soft red winter wheat futures rose 5 1/2 cents to close at $6.75 1/2, hitting a contract high and the highest level since 2014. For the week, March SRW gained 36 3/4 cents. March hard red winter wheat futures also hit a contract and six-year high and closed the week up 48 ¼ cents to $6.43. Spring wheat futures extended this week’s gain to 35 1/2 cents to close at $6.43 1/4. Today’s lower-range closes after hitting new swing highs or contract highs in winter wheat futures suggests the bulls may be ready for a pause early next week. However, the bulls have the solid technical advantage amid price uptrends firmly in place, and bullish fundamental news is still fresh. Russia has announced it will place a 50-euro per MT ($1.65 per bu.) duty on its wheat exports beginning March 1 through June 30. That’s double the present duty. The aggressive duty is a de facto Russian wheat export ban and other primary exporters including the U.S. will fill world demand
Cotton: Cotton futures consolidated to close the week, with futures settling 18 to 45 points lower for the day but higher for the week. The front-month settled 93 points higher for the week and above the 80.00-cent level. USDA made another dramatic cut to its U.S. cotton production estimate this month, but reaction to the cut was restrained, as the market had been anticipating such cuts for months and USDA was playing catch up. USDA also raised its cotton export forecast for 2020-21. The unusual combination of rising exports and shrinking supplies should keep the U.S. cotton market well supported. The U.S. banned cotton from China’s Xinjiang region over allegation of forced labor this week. And other countries have also moved to restrict cotton imports from the region.
Hogs: Strong finish to a mixed week of trade. April hogs rose 57.5 cents to close at $72.65 on Friday, paring the weekly decline to 17.5 cents. June hogs rose a nickel to $84.375, capping a 62.5-cent gain for the week after setting a new contract high at $85.425. Recovering fresh pork prices after a midweek slump helped to support the rebound in hog futures to close the week. Pork cutout values at midday Friday rose $2.08 at $64.84. That’s up $1.79 from a week ago and $6.14 higher than a year ago. Sales this week were moderately active and will need to stay that way with supplies of market-ready hogs. Packer margins are estimated at $42.75, up from $37.95 a week ago. Cash hogs were steady Friday but down for the week. Big hog supplies coming to market and heavy slaughter weights that continue to add at least 2% more pork to weekly totals are also near-term negatives for futures and cash markets. Deferred lean hog futures moved to new contract highs this week after corn prices surged to 7 1/2-year highs, increasing speculation farrowing will be reduced in 2021 and producers sell hogs at lighter market weights.
Cattle: Live cattle finished 45 cents to $1.325 higher through the December contract today. Feeder cattle posted gains of $1.70 to $2.45 through the October contract. But for the week, April live cattle dropped $1.10, while March feeders fell $1. Feeder cattle futures remain highly responsive to price movements in the corn market and that’s likely to remain traders’ focal point coming out of the extended holiday weekend. If the strong uptrend in corn futures continues, it will not only be difficult for feeders to build on today’s corrective gains but fresh selling would be likely. Focus in live cattle futures next week will be on the cash and product markets as traders watch to see if prices start to improve seasonally. But if feeder cattle face heavy pressure from any additional strength in corn, it would weigh on the fat market.
Corn: March corn futures rose 9 3/4 cents to close at $5.34 1/4, which is a contract and 7.5-year high close. Today’s strong gains affirmed the bulls are not yet exhausted. Bulls continue to be fueled by U.S. corn production that is down almost 1.1 billion bushels from the August USDA estimate as the late-season drought caused larger damage than first measured. Now, traders await the amount of upcoming rains in South America with forecasts now looking drier at the end of January. The Rosario Grains Exchange forecast the Argentine corn crop at 46 MMT, down from 48 MMT previously and below USDA’s 47.5 MMT forecast earlier this week. Argentina has yet to finish planting and that means new-crop supplies won’t be available until mid-summer. The Buenos Aires Exchange will update Argentine corn and soy conditions this afternoon.
Soybeans: Soybean futures nearly matched yesterday’s trading range with the market enjoying gains for much of the session and settling high-range and up 20 1/2 to 25 1/2 cents. Soymeal settled $2.50 higher in the front-month and $5.70 to $7.80 higher in deferred contracts. Market bulls maintain the advantage, with several demand updates reminding of that bullish soybean story. Meanwhile, Brazilian truckers are planning a strike on Feb. 1 to protest high diesel prices and other issues such as expensive toll fees. However, there are few indications that this could be as disruptive as occurred in 2019. Overnight, Chinese customs data showed the country imported a record-high 100.33 MMT of soybeans in 2020, a 13.3% jump from year-ago levels. Today’s weekly export sales update showed the U.S. sold a stronger-than-expected 908,000 MT of old-crop soybeans the week ending Jan. 7, with another 326,000 MT sold for 2021-22 delivery. China was the lead buyer and the lead destination for soybeans.
Wheat: Wheat futures finished high-range with gains of 7 to 9-plus cents in SRW contracts, around a dime in HRW contracts and 12 to 13 cents in HRS contracts. Spring wheat futures led today’s price rally, signaling intra-market spreading was a featured activity. Additional support came from rising international prices and expectations Russia will tighten its export restrictions. Russian officials are expected to meet on Friday to discuss a proposal from the ag ministry to add a wheat export tax of 25 euros (around $30) per MT from Feb. 15 to March 15 and then increase it to 45 euros ($55) per MT from March 15 to June 30. Reports out of the country today indicated Russia may extend tariffs on wheat exports into the 2021-22 marketing year that starts July 1.
Cotton: Prices opened steady and pushed lower in early trading before rebounding to close higher. March futures rose 23 points to 81.15 cents and December closed unchanged at 76.80 cents. Choppy trade as price strength has stalled despite USDA slashing U.S. production more than expected on Tuesday. Buying interest was curtailed by news The U.S. will bar entry of all cotton products and tomatoes from China’s Xinjiang region, a sweeping move that prompted protests from Beijing and fresh vows to defend its companies. Even the strong weekly export sales failed to give the market an immediate boost today. The market found some support into the close on expectations President-elect Joe Biden’s Covid-19 relief plans will top $2 trillion.
Hogs: February lean hog futures fell $0.55 to close at $66.30 today, while April futures dropped $0.875 at $72.075 and hit a two-week low. Lean hog futures continue to be pressured this week by the February contract’s premium to the cash market. Deferred futures contracts are faring better this week. Big hog supplies coming to market and heavy slaughter weights that continue to add at least 2% more pork to weekly totals are also near-term negatives for futures and cash markets. Deferred lean hog futures moved to new contract highs this week after corn prices surged to 7 1/2-year highs, increasing speculation farrowings will be reduced in 2021 and producers sell hogs at lighter market weights.
Cattle: Mixed close with nearby contracts lower and deferreds higher. April cattle fell 25 cents to $117.225. March feeders dropped 95 cents to $133.375. Deferred live cattle futures are looking beyond the cash market’s immediate woes, as $5 corn will curb market weights and smaller supplies are expected in the second half of the year. Also, the strong rally in stocks on bets the economy will rebound added to better beef demand outlooks in 2021 after consumer demand last year proved resilient amid the pandemic. Cash sales this week have ranged from $111 all the way down to $108 in Iowa today, down $1 to $4 this week. Usually, cash strengthens post year-end holidays but this year an abundance of committed cattle inventory and generally ample supply weighed on packer demand.
Corn: March, May and July corn futures finished low-range but still posted gains of 7 1/4 to 8 3/4 cents and finished just above opening levels. New-crop December futures dropped 4 1/4 cents. Corn futures gapped higher overnight following Tuesday’s limit-up performance and extended sharply to the upside but then pulled back to from the highs during daytime trade. Bears may try to argue the move well off session highs signals short-term exhaustion. But finishing higher in old-crop contracts and above the opening levels suggests bulls aren’t done yet. USDA’s Tuesday report data was surprisingly bullish for corn, though speculative money flow will remain the key to near-term price performance as any fundamental news. Traders expect corn export sales for the week ended Jan. 7 to total between 700,000 MT and 1.2 MMT tomorrow morning.
Soybeans: Futures reversed overnight gains and closed near session lows. March beans were down 12 at $14.06 1/4 with November down 1/2 cent at $11.76. March meal was down $7.90 to $457.30 and March soyoil down 45 points to 42.18 cents. Profit-taking emerged today after overnight strength on speculation that the tidal wave of bullish news yesterday from USDA is unlikely to be repeated in the near term. That is especially true as South America weather leans negative with forecasts for 85% of the Brazilian belt to get rain the next five days, reducing the dryness areas to less than 15%. Rains this week in Argentina and more in the forecast in the 8- to 14-day outlook also hint at a less threatening outlook. The focus with improving weather in South America will turn the willingness of end-users to extend coverage on setbacks and how funds managed a near record long position.
Wheat: SRW wheat futures rose to new highs, closing lower with HRW futures holding onto small gains. March SRW futures fell 4 1/2 cents to $6.60 1/2 and March HRW futures gained 3 1/4 cents to $6.25 3/4. March spring wheat was up 6 cents to $6.26 3/4. Mixed finishes today on profit taking and unwinding of spreads. USDA wheat supply and demand changes were positive yesterday. The agency cut its U.S. ending stocks forecast to the smallest in six years, albeit at more than ample levels. However, USDA also said farmers planted about 1.6 million more acres of winter wheat last fall, the most in three years. USDA’s global ending stocks forecast was cut to 313.2 MMT and global consumption increased to 759.5 MMT. Global inventories are still projected at a record.
Cotton: March cotton futures prices closed down 78 points at 80.92 cents and near the session low. Prices hit a contract and nearly 2.5-year high earlier today. Some routine profit taking was featured in the cotton futures market today. Prices shot higher Tuesday after a bullish USDA report that showed the U.S. crop was cut 710,000 bales more than expected and ending stocks dropped 800,000 bales more than anticipated. With the soybean and corn markets trying to buy acres cotton must actively participate or it is at risk of losing acres. With old-crop ending stocks projected at 4.6 million bales, some loss of cotton acres wouldn’t be a concern, but the cotton market can’t give up a lot of acres with warm, dry conditions associated with the La Nina pattern expected to extend through at least spring.
Hogs: Lean hog futures settled split, with February through May futures 5 cents to $1.75 lower and deferred months settling 20 to 92 1/2 cents higher. The front-month gapped lower on the open and settled low-range, but deferred contracts settled mid- to high-range, with summer months registering new contract highs. February lean hogs extended the downtrend as traders took note of futures’ wide premium to the CME lean hog index. After today’s heavy losses, the contract is trading “just” $2.36 above the index, which has climbed in recent weeks. Pressure has also stemmed from rising hog weights in the key Iowa/southern Minnesota market. But processors have been running aggressive slaughter schedules with margins strong near $37 a head, according to HedgersEdge.com.
Cattle: February live cattle futures prices closed down $0.225 at $112.25 today and April live cattle fell $0.175 at $117.475. March feeder cattle futures gained $0.35 at $134.325 after hitting a seven-week low early on. Live cattle futures are seeing routine profit taking from recent gains, while the feeder cattle futures market tries to recover from recent selling pressure tied to the strong gains in the corn and soybean meal markets. Traders are looking for this week’s negotiated cash cattle price to be steady to weaker than last week. Slaughter margins are the smallest since March and packers will continue to leverage their committed cattle inventory against the cash market. Choice boxed beef climbed another $0.94 and Select gained $1.16, with movement at 72 loads at midday.
Corn: Futures jumped sharply higher and old-crop futures closed up the 25-cent trading limit, with limits expanding to 40 cents on Wednesday. March corn rallied 25 cents to $5.17 1/4 and December was rallied 16 3/4 cents to $4.57 1/2. Prices rocketed higher after the USDA cut the 2020 crop more than expected, reported smaller Dec. 1 inventories from the smaller crop and record use in Q1, leading to smaller U.S. and world carryover projections. U.S. corn production estimated at 14.182 billion bu., down 325 million from November and 288 million bu. below the average trade estimates. The estimate fell below the lowest trade estimates as USDA trimmed harvested acreage 60,000 acara and slashed the national average yield 3.8 bu. from November to 172.0. Corn stocks on Dec. 1 were 11.322 billion bu. 629 million below the average trade estimate and below the lowest trade estimate of 11.59 billion bushels. Implied disappearance last quarter rose to a record.
Soybeans: March soybean futures closed up 45 3/4 cents at $14.18 1/4 and hit a contract and 6.5-year high. March soybean meal futures gained $18.60 at $465.40, soaring to a contract high. March bean oil closed unchanged at 42.63 cents. Traders expected bullish USDA numbers in today’s supply and demand reports and funds were ready to run prices higher. USDA’s final 2020 soybean crop estimate is down 35 million bu. from November and 23 million bu. below the average pre-report estimate. Soybean stocks in all positions on Dec. 1 of last year were 13 million bu. above the average pre-report trade estimate but down 9.8% from year-ago. On Dec. 1, on-farm stocks totaled 1.31 billion bu., down 14% from year-ago. month. Before the reopening this morning, USDA announced new soybean sales, adding to the bullish sentiment Now, trader focus will return to South America weather and Chinese demand.
Wheat: March soft red winter wheat futures closed up 30 1/4 cents at $6.65 and hit a contract and 6.5-year high today. March hard red winter wheat futures gained 28 1/2 cents at $6.22 1/2 today and hit a contract and six-year high. The wheat markets got a boost from friendly USDA numbers today but also on good spillover buying interest from very strong gains in corn and soybean futures. U.S. wheat stocks in all positions on Dec. 1, 2020, were 21 million bu. below the average pre-report trade estimate and down 9.1% from year-ago. USDA’s all winter wheat seeding estimate is up 1.576 million acres from last year and 463,000 acres above the average pre-report estimate. U.S. wheat carryover for 2020-21 was cut 26 million bu. from last month and is 23 million bu. below the average pre-report trade estimate. It is a six-year low if realized.
Cotton: Cotton futures finished high-range with gains of 127 points in the March contract, 129 points in the July contract and 63 points in new-crop December cotton. Bulls reacted favorably to USDA’s report data. But frankly, given that the U.S. crop was cut 710,000 bales more than expected and ending stocks dropped 800,000 bales more than anticipated, even stronger gains wouldn’t have surprised us. Bulls have plenty of fodder to extend gains, especially if the grain and soy markets continue to rise. Funds were net long 70,644 cotton futures contracts as of Jan. 5 and have added to their length since then. While that’s a big position, at 30% of open interest, there’s still room for funds to add to net longs.
Hogs: Futures rose with some deferred futures months touching new contract highs. April hogs rose 57.5 cents to $73.525 and June gained 97.5 cents to $84.975, setting a new contract high at $85.10. The hog market found support yesterday on early weakness and continued higher today. Some of the buying is likely from investors moving into commodities as a hedge against inflation. Cash hogs were weak at midday with fairly light negotiated purchases. Processors have been pushing daily slaughters to near record totals every day, which is a necessity as supplies of market-ready barrows and gilts are heavy. The big daily slaughter runs are also helping to keep supply chains moving. While that’s preventing more hogs from backing up in the production system, it’s also adding more pork to the market. But demand is holding up in the domestic markets and traders will be watching the weekly export sales data Thursday after recent improvement in 2021 business.
Cattle: Live cattle futures were a mixed bag today. February through June futures settled 2 ½ to 92 ½ cents lower, while August through December futures finished 90 cents to $1.00 higher. Feeder cattle dropped to their lowest level since late November, with futures settling $1.70 to $2.925 lower through the August contract. Nearby live cattle contracts remain at a premium to last week’s cash action that ranged from $110 to $112, generating an average price just above $111. That has limited buying in those contracts as the market awaits more clues regarding this week’s likely action. The tight feed supply picture painted by USDA and the coinciding price spike for corn and wheat futures weighed heavily on feeder cattle futures today. On a more positive note, feeder steers and heifers traded at steady to $2 higher prices at an Oklahoma City feeder cattle auction today.
Corn: March corn futures closed the day down 4 cents at $4.92 1/4. Some routine profit-taking pressure and position evening was seen today ahead of Tuesday’s USDA supply and demand reports. Most traders look for USDA to lower its estimates for U.S., Argentine and Brazilian corn production. Traders also looking for some clarity on feed demand and corn use for ethanol. Look for more active futures trading in the immediate aftermath of the 11:00 a.m. CST report’s release. The corn market was also pressured in part today by slightly wetter forecasts in South America. But after the extremely dry start to the growing season, actual rainfall will be critical this week in Argentina and in Brazil heading into the safrinha planting season next month.
Soybeans: Soybean futures finished 2 1/4 cents lower to 1/4 cent higher through the July contract and midrange for the day. New-crop November futures finished low-range with losses of 6 3/4 cents. Soymeal futures posted gains of $5.60 to $7.20 through the July contract. Soyoil futures dropped 63 to 96 points through the July contract. Soybeans faced corrective selling today as traders positioned for Tuesday’s barrage of USDA reports. While the data is expected to be bullish, traders opted to take some money out of the long side of the market. But the rebound off session lows signals seller interest remains limited. The reaction to tomorrow’s crop reports will be telling as much of the expected bullish news is already factored into prices. A bearish reaction to bullish data could signal at least a short-term top is in place. But a bullish reaction would suggest the market is ready for another leg higher.
Wheat: Wheat futures traded in a wide, two-sided trading range today. The markets settled in the lower half of their daily trading ranges but also well off the lows, with SRW wheat down 3 to 4 cents, HRW wheat fractionally lower and HRS wheat futures posting losses of 1 ¾ cents in most contracts. Wheat futures saw two-sided trade today, with an early rally in corn and soybeans lifting the market and a pullback during the day trading session for those markets leading to a softer trade in the wheat complex as well. Reports Russia may double its tariff on wheat exports to 50 euros per metric ton helped the market to settle well off its lows, though these reports were countered to some degree by a coinciding report the duties may not take effect until March 15 versus the initially planned Feb. 15.
Cotton: Futures reversed early sharp losses and closed higher with March futures up 66 points to 80.43 cents. December futures 41 points to 76.60 cents. The reversal up today underscored bullish sentiment heading into Tuesday’s USDA production and supply and demand updates. Traders expect USDA will lower its estimate for U.S. production and carryover but raise its estimate of world production. World consumption could increase slightly as could U.S. exports. The combination of such events may support a rally toward 83 cents. U.S. 2020-crop production is expected to be lowered to 15.3-15.4 million bales. A reduction below 15.2 will help scale 83 cents. World carryover is expected to be 97-98 million bales
Hogs: February lean hog futures prices lost $0.225 today to close at $68.475, while April hogs rose $0.125 at $72.95. The futures market held up well today after hog slaughter and pork production hit records last week. Processors ramped up production after two weeks of holiday-interrupted schedules and the reopening of a Columbus Junction, Iowa pork plant after repairs. Aggressive kills helped the cash market to strengthen late last week. Follow-through buying this week would signal a seasonal low has been put in place. Pork cutout values moved up to a seven-week high to end last week and added to that today as the noon report showed cutout up $4.13, led by solid gains in hams.
Cattle: February live cattle fell $1.075 to $113.40 and April fell 95 cents to $118.175. March feeders were up 7.5 cents to $136.90. Cattle futures fell today along with many other commodity and equity markets. Feeders were able to come back and close mixed after corn prices fell. The early break uncovered buying in deferred futures with those contracts closing closer to session highs or fractionally higher. Last week’s cash price averaged 25 cents cheaper than the prior week at $111.27. This week with the weaker start to futures trade, traders are looking for steady to lower cash markets. Packers are buying just enough each week to fill week-ahead kill schedules after adding to forward purchases last month, keeping market leverage in their hands.
Corn: Old-crop corn futures finished 1 1/4 to 2 1/4 cents higher today. New-crop December futures slipped 1/2 cent on the day. For the week, March corn futures firmed 12 1/4 cents and settled at $4.96 1/4 after pushing above $5.00 earlier in the week – the first time front-month futures traded above that level since May 2014. The rally in futures continued this week and funds expanded their massive net position. Speculative money flow will remain a key component to price action next week, but USDA’s Jan. 12 reports and South American weather will also play a key role. Traders expect USDA to lower its 2020 U.S. corn crop estimate, along with the projections for U.S. and global ending stocks. Dec. 1 corn stocks are expected to come in well above year-ago, but overall, traders anticipate the report data will be bullish. With much of that already factored into prices, however, the data may have to be even more bullish than expected to get a strong upside price reaction. If the data is neutral or bearish compared with pre-report expectations, it could trigger a corrective pullback.
Soybeans: March beans gained 19 1/2 cents to close at $13.74 3/4, capping a 63 3/4-cent weekly gain, while November beans rose 50 cents this week to $11.61 3/4. March meal extended this week’s gain to $10.20, at $439.60 and March soyoil rose 1.19 cents to 43.59 cents. Nearby futures rallied to a new 6 1/2-year high Friday but settled off the day’s best levels ahead of the weekend. The market remains supported by expectations for smaller U.S. and world production and carryovers from USDA on Jan. 12. U.S. ending stocks are expected to fall to 139 million bu. next week, down from 175 million in December and the smallest in seven years when they ended at 92 million. World ending stocks are expected to fall to the lowest in five seasons. Traders are also looking for U.S. Dec. 1 stocks to fall to 2.92 billion bu., down from 3.252 billion bu. a year ago. The trade has anticipated very bullish data next week and how the market reacts to the data will be just as important as the numbers, themselves. Momentum studies are at overbought levels after reaching overhead resistance levels at $13.90 today.
Wheat: SRW futures fell 3 ½ cents to close at $6.38 3/4 and down 1 3/4 cents this week. March HRW futures fell 5 3/4 cents to $5.94 3/4 and down 8 3/4 cents this week. March spring wheat rose 8 3/4 cents this week to $6.07 ¾ on unwinding of spreads versus the winter wheat futures. Wheat started higher overnight with corn and beans and turned lower, forming a bearish outside day reversal down pattern. The market is looking for USDA on Jan. 12 to estimate winter wheat planted acreage to rise about 1.1 million acres to 31.5 million acres, the first increase in eight years. The fear in the market today is that number may prove larger as high crop insurance prices and adequate moisture for emergence last fall. Welcome moisture is headed for dry areas of the Black Sea region. World Weather said some of the precipitation in Russia’s Southern Region could be significant. However, the U.S. Plains looks dry the next few weeks. After another week of disappointing weekly export sales data this week, the focus remains on new business.
Cotton: March cotton futures ended the day up 1 point at 79.77 cents but on the week posted an impressive gain of 165 points. The late-week pause after good early-week gains suggests some buying momentum will once again enter the cotton futures market early next week. The December Employment report out Friday morning show a larger decline of 140,000 in non-farm jobs, confirming a slipping U.S. economy after the summertime rebound. Cotton futures traders took some money out of the long side of the market late this week as they prepare for next Tuesday’s USDA reports. Traders are looking for U.S. ending stocks to decline about 300,000 bales from last month’s estimate on additional cuts to the crop production.
Hogs: Lean hog futures got off to a higher start, but buying was short lived. Futures settled 10 to 50 cents lower through the July contract with far deferred months registering slight gains. April lean hogs settled 57 ½ cents higher for the week. Hog slaughter and pork production hit records this week, with slaughter ramping up after two consecutive weeks of holiday-clipped kills and the resumption of processing at a Columbus Junction, Iowa pork plant after a three-week closure. That helped cash prices firm late this week and traders will be watching to see if that trend continues, confirming a seasonal low. Daily pork load counts will also be watched to ensure high production is met by strong demand.
Cattle: February live cattle futures closed the day down $0.50 at $114.475. April live cattle futures were down $0.20 at $119.30 and for the week gained a nickel. March feeder cattle futures finished Friday down $0.75 $136.825 and for the week lost $3.40. After strong early-week losses the live cattle futures market made a comeback to erase all but a nickel of those declines. Stabilization of futures, strong packing margins and aggressive retailer buying helped cash cattle trade to pick up mostly around the $112 mark on Thursday, in line with the upper end of last week’s cash action. Such suggests steady to higher live cattle futures price action next week. Feeder futures may continue to struggle next week, but a stable to firm live cattle futures market will put a floor under feeder futures.
Corn: Corn closed lower but in the upper third of today’s price range. March corn was down a penny to $4.94 and December was down 1/4 cent to $4.41. The corn market is consolidating a $1.70 rally off the Aug. 12 low. Futures were pressured by slightly wetter forecasts in South America. However, after the extremely dry start to the growing season, actual rainfall is critical. Rain events have not been well organized in the past. That means until rains verify, the market will swing with each new weather model run. Traders remain focused on USDA’s supply and demand updates next Tuesday. Most look for USDA to lower its estimates for U.S., Argentine and Brazilian corn production.
Soybeans: March soybean futures closed down 6 1/4 cents at $13.55 1/4 today. March soybean meal ended the day down $6.10 at $432.20 and March bean oil lost 5 points at 43.79 cents. Beans, meal and bean oil futures saw some normal profit taking from the shorter-term traders today. Also, weather patterns in South American soybean regions are a bit less threatening. Rain is expected to impact many areas in Argentina over the next 10 days, with western and northern areas likely to be the wettest. Argentina’s potential for drier and warmer weather in the last 10 days of January are moderately high, which will stress those crop areas that receive the lightest rainfall next week. Brazil rainfall has been sporadic and light at times this week. Net drying has occurred in many areas, but good soil moisture is still supporting crop needs. A boost in precipitation will occur in Brazil grain, oilseed and cotton areas during the weekend and next week.
Wheat: March soft red winter wheat futures closed the day down 5 1/4 cents at $6.42 1/4 today, while March hard red winter wheat futures fell 5 cents at $5.98 1/2. Profit-taking pressure was seen today after the recent solid gains that saw SRW and HRW futures hit six-year highs this week. A rebound in the U.S. dollar index today also likely prompted some of the selling pressure in wheat futures. The weekly USDA export sales report in the week ended Dec. 31 showed U.S. wheat sales fell 47% below the prior four-week average to 275,300 MT, with China buying 55,400 MT. Sales were at the low end expectations, which also added some selling pressure in futures. All the talk about U.S. wheat getting competitive on the world market has yet to result in actual improved business.
Cotton: Cotton futures finished mixed today, with the March and July contracts 33 and 28 points lower, respectively, while the new-crop December contract ended 14 points higher. Old-crop cotton futures were unable to hold earlier gains as light profit-taking crept into the market late. Traders took some money out of the long side of the market as they start to prepare for next Tuesday’s USDA reports. More corrective trade is possible Friday, though seller interest should be limited by expectations USDA is going to cut its U.S. cotton crop and ending stocks figures from last month.
Hogs: February hogs fell 65 cents to $69.125 and April rose 5 cents to $73.05. Prices end mixed with deferred futures leading higher, but February fell as the premium to the cash market limited buying interest. Midday pork cutout values rose $3.42 to $78.86 on strong morning sales after big movement the prior two sessions. Cash hogs were quoted sharply higher at midday with national average prices rising $3.57. The strength in the cash market may continue as stronger grocer demand will boost packer demand for slaughter numbers.
Cattle: Live cattle futures saw two-sided action today, but the market ultimately settled high-range with a loss of 2 ½ cents for the front-month and gains of 22 ½ to 42 ½ cents for deferred months. Feeder cattle also settled high range and up 92 ½ cents to $1.35, with deferred months leading gains. Consolidative trade continued today after wide gyrations in both directions to start the week, with traders waiting for the cash market to provide additional direction. Trade has been slow to develop, with just some very light tests at steady prices of $110 in Iowa and $112 in Kansas. February live cattle are trading at nearly a $3.50 premium to last week’s average cash price, with packers enjoying wide profit-margins for this point in the season. HedgersEdge.com pegs margins near $117 a head, down nearly $66 from week-ago levels.
Corn: March corn futures prices closed up 3 1/4 cents at $4.95 today and hit another contract and 6.5-year high. The corn market bulls are keeping their foot on the gas amid tightening global supplies and concerns about crop development in South American corn regions despite some recent rains. Speculative interest on the long side of the corn futures market remains high, as key outside markets are suggesting the “inflation trade” is heating up raw commodity prices. Traders are focused on USDA’s supply and demand updates next Tuesday. Most look for USDA to lower its estimates for U.S., Argentine and Brazilian corn production. The size of those cuts will set the tone for trading into the establishment of crop insurance prices in February.
Soybeans: Soybeans posted gains of 10 to 15 1/4 cents but finished in the lower end of today’s trading range. Soymeal futures ended mid-range with gains of $4.80 to $7.90 through the July contract. Soyoil closed low-range with gains of 24 to 30 points and well below early highs. Futures again sprinted to strong gains early in the session only to retreat into the close. Fundamental support for the buying in the soy complex today came from South American supply concerns, especially in Argentina. While soy crushers have returned to work, unionized grain inspectors remain on strike and Argentine farmers are planning a three-day protest Jan. 11-13. Dry weather is also reducing Argentine crop estimates. While weather in Argentina is worrisome, conditions across much of Brazil are favorable.
Wheat: An early rally in wheat futures fizzled after the market failed to move to push above yesterday’s six-year highs. SRW wheat futures settled ½ to 6 ½ cents lower, while HRW wheat posted losses of 4 ¼ to 5 ¾ cents. Nearby contracts led losses. HRS wheat futures finished around a penny lower. Wheat futures remain in a followers’ role, and strong early gains in the corn and soybean markets bolstered wheat as well. But those markets settled well off their highs and wheat was unable to push to new highs, triggering a round of profit-taking. Unlike corn and beans, wheat lacks a compelling demand story, which has been a limiting factor for the market. While upcoming restrictions/taxes on wheat exports out of Russia and reduced crop prospects in Argentina could shift some business to the U.S., that has yet to occur is a sizable fashion, despite the price slide for the U.S. dollar index. Global wheat supplies are still plentiful.
Cotton: March cotton fell 29 points to 80.06 cents and December cotton was up 10 points to close at 76.21 cents. Nearby futures rose to the highest since December 2018 on the weekly chart before running out of gas and falling back in the red and setting new session lows in the final 30 minutes of trading. Trade will be dominated by the weekly export sales data in the morning. Accumulated export shipments are already running 34% ahead of last year but unshipped sales are 19% behind a year ago. It will be important to see continued strong shipments and new sales. The trade remains optimistic China and others will continue to scoop up cotton in anticipation of a strong global economic recovery later this year. Chinese cash yarn prices ended the year on their highs.
Hogs: February lean hog futures closed down $1.15 at $69.775. April futures lost $1.10 at $73.00 and closed nearer the session low today after scoring a 2.5-month high early on. Some profit taking in the futures markets was featured today after recent gains. Prices were also pressured today as the lead February hog futures contract still holds a more-than-$7.00 premium to the CME Lean Hog Cash Index, which is presently projected at $62.42, according to Dow Jones Newswires. Two weeks of sharply reduced holiday production have cleared the pipeline. Today’s hog slaughter came in a 495,000 versus 472,000 last week and 495,000 at this time a year ago. This week’s product market action has signaled stronger underlying demand among retailers on price breaks, despite the post-holiday season typically being a fairly lackluster demand period.
Cattle: February cattle fell a nickel to $115.00; April futures rose 7.5 cents to $119.275 and June gained 27.5 cents to $114.95. March feeders were down 85 cents to $135.575. After early weakness, live cattle futures rebounded to close slightly higher but below key overhead resistance. The market is finding support from general economic optimism and speculation more fiscal stimulus is coming in January. U.S. stock indices rose to new records and crude oil is holding above $50 a barrel. The ability to extend strength after yesterday’s sharp turnaround is positive. Optimism for Q2 and Q3 is rising after light placements in October and November. Rising corn prices will help to trim heavy cattle weights. Cash cattle trade in the south remains undefined. But beef cutouts are $3.50 lower, suggesting plenty of packer margin to pay more.
Corn: Corn futures settled in the upper half of today’s trading range with gains of 4 to 8 ¼ cents through the December 2021 contract. Futures stopped short of penetrating Monday’s high. The combination of fresh money flow, strong Chinese buying, South American weather threats and tightening stocks at home and around the world fueling have fueled frenzied buying in corn and other ag commodities to close 2020 and open 2021. Strong rallies in the soybean, wheat and crude oil markets added to bullish optimism. While more organized showers fell for South America over the past 24 hours, traders are more focused on sliding crop estimates and the warm, dry two-week outlook for Argentina. The market fully expects USDA to trim its U.S. and global corn ending stocks projections on Jan. 12.
Soybeans: March beans closed 34 cents higher at $13.47, below new highs at $13.73 1/4. March soymeal rose $8.10 at $431.80 and March soyoil jumped 1.47 cents to 43.60 cents. Soybeans gave back some of the early gains near the close on profit taking and closed below yesterday’s high. The path of least resistance remains higher, but this market is starting to show signs it will need another positive jolt on the weather or demand to sustain this current steep uptrend. Funds were said to be buyers of 40,000 contracts today. Market bulls still see upside potential and believe that new-crop prices may soon need catch up to reflect the potential that this can be a multi-year year issue without big U.S. plantings and a good growing season.
Wheat: March SRW wheat rose 12 cents to $6.54 and March HRW futures gained 9 3/4 cents to close at $6.09 1/4. March spring wheat rallied 8 1/4 cents to $6.07 1/4. Wheat prices rose to the highest in six years on lower state crop ratings, more talk of Chinese and Brazilian interest for wheat and technical buying. The weakness in the dollar and strong rallies in other commodity markets added to the bullish tone in wheat. Gold traded near an eight-week high as U.S. 10-year inflation expectations topped 2% for the first time since 2018 on hopes that monetary stimulus and government aid policies will drive demand in the post-vaccine world. The higher inflation expectations are boosting speculation in commodity investments.
Cotton: March cotton futures closed up 138 points at 80.35 cents today, nearer the session high and marking a 25-month high. December cotton closed up 70 points at 76.11 cents. The raw commodity markets, led by Nymex crude oil prices, which hit a nine-month high today and pushed above $50 a barrel, are on fire to start the new year, including cotton. It appears the inflation trade is back in vogue among the big speculative fund traders, what with global financial systems awash in liquidity from central banks trying to fight the negative impact of the pandemic. Americans also now have some more spending money for items like apparel, as government stimulus funds began arriving for Americans last week.
Hogs: February lean hog futures finished 30 cents lower. The April through December contracts firmed 7 1/2 to 70 cents on the day. The June, July and December contracts posted new contract highs, while the August contract matched its high from Monday. As the adage goes, a rising tide lifts all boats. That carried through in the hog market today as deferred hog futures rode a strong wave of broad-based buying in the commodity sector higher. That, more than anything fundamental, was the reason for today’s price strength. February hogs were capped by the more than $10 premium the lead contract holds to the cash index.
Cattle: February live cattle futures closed the day up $2.75 at $115.05, while April live cattle gained $2.85 at $119.10. March feeders rose $1.40 to close at $137.425. After Monday’s solid losses, the cattle futures today enjoyed solid support from the updraft in many raw commodity futures markets that has the big speculators once again playing the long side. Most of Monday’s losses were erased today. Today’s noon beef report showed Choice grade price down $3.84 and Select down 77 cents, on movement of 112 loads. Today’s cattle slaughter was estimated at 118,000 head compared to 116,000 last week and 123,000 head a year ago at this time.
Corn: March futures closed down 1/4 cent at $4.83 3/4, well below the overnight at $4.97 3/4. December fell 1/4 cent to close at $4.34 1/2, down from a session high at $4.40. Corn rallied sharply overnight with soybeans but the combination of increased farmer selling through the morning and some rains in the South America forecasts encouraged traders and funds to collect some long profits. The CFTC is expected to show fund net longs rose to the highest since the 2012 drought in a report later today. That might indicate much of the bullish news about South American weather, smaller U.S. production, record Chinese purchases and tightening global inventories is mostly factored into the rally. The Chinese ag minister said his country will increase its corn area in 2021 and said corn prices will probably fall over the next few years from current records. If they don’t fall, then there could be a further tightening of global supplies on stronger Chinese import demand.
Soybeans: March soybean futures closed up 2 cents at $13.13 today and early on hit a contract and 6.5-year high. March meal also hit a contract high early on but then sold off to close down $5.70 at $423.70. The grain market bulls came out of the gate strong early overnight to start the new trading year, but then appeared to run out of gas as prices closed near the bottom of today’s large trading ranges. It will be important for the bulls to continue to show some power this week to keep the major bull run alive. If they can’t do that, then the big fund speculators will get very nervous and would likely start to liquidate their big long positions. March soybean futures surged more than 40 cents higher overnight, touching $13.49 1/2. USDA inspected 1.306 MMT of soybeans for export the week ending Dec. 31. The department also added 754,646 MT to what was initially reported as inspected the week ending Dec. 24
Wheat: March soft red winter wheat futures hit a contract and six-year high today before backing off on some profit taking to close up 1 1/2 cents at $6.42. March hard red winter wheat hit a nearly two-year high today before sliding back and closing down 4 cents at $5.99 1/2. The wheat futures markets were supported in part today by big early gains in corn and soybeans, as well as the depreciating U.S. dollar on the foreign exchange market that makes U.S. wheat more competitive on the world market. Russian measures to curb its wheat shipments may curb the exportable surplus. Moisture deficits remain for about one-third of the U.S. winter wheat crop. After the close today, some states will update crop ratings, which will set the tone for price direction this week.
Cotton: Cotton futures kicked off 2021 in an impressive fashion, with the March contract shooting to new contract highs and coming within 10 points of the 80.00-cent level. Futures settled midrange with gains ranging from 54 to 105 points, with the July contract leading gains. Cotton and many ag commodities ended 2020 on a strong note, which paved the way for follow-through buying to kick off 2021. Money flow is driving the impressive moves, but there is certainly fundamental backing for the rally. Traders are banking on an uptick in cotton demand as vaccination pick up around the world, helping economies to pick up steam as life eventually gets back to normal. There are also some supply concerns, with traders expecting USDA to lower its U.S. cotton crop estimate in its Jan. 12 report.
Hogs: February hog futures rose 95 cents to $71.225 and April hogs rose $1.375 to $73.625. Futures extended last week’s rally but closed in the middle to upper 1/3 of today’s ranges. The rally was supported by fresh technical buying to start the new trading year. Cash hogs were steady to steady to firm today but supplies of barrows and gilts remain ample. The CME Lean Hog Index rose 21 cents today to $60.07, a big discount to current February futures. Futures rallies will depend on much stronger cash markets. Pork cutout values jumped $7.16 to $85.75, led by a more than $25 rise in hams. That’s a positive start on firming packer margins in January. However, sales were light and that is a concern as pork supplies will recover the next two weeks with full schedules after two holiday-shorten slaughter weeks. But pork cutouts are strong enough to pull cash bids higher this month.
Cattle: Live cattle futures posted losses of 82 1/2 cents to $3.00 through the December contract, led lower by the April contract. Feeder cattle futures ended $1.15 to $4.20 lower through the October contract, as March feeders paced declines. Funds liquidated long positions to kick off the new year. Fundamental reasons for today’s sharp selloff were lacking, especially for live cattle. Feeders were initially pressured by strength in the corn market but were unable to rebound as corn turned negative intraday. Additional pressure came from sharp losses in the stock market to open the new year. Losses in live cattle and feeder cattle futures extended as support levels were violated and sell stops were triggered.