Corn: Down 4 to 5 cents
Soybeans: Down 15 to 20 cents
Wheat: Down 8 to 14 cents
GENERAL COMMENTS: Grains and soybeans accelerated their downward correction overnight. Easing concerns about the short-term weather and crop production in Brazil and Argentina triggered both light selling and further fund liquidation of long positions. Soybean futures dropped more than 2% overnight and are poised for its first weekly decline in more than a month. Corn is back testing Wednesday’s low and wheat is heading for a fourth straight decline after hitting new highs to end last week’s trade. Corn and wheat prices were also set for weekly losses. Concern also mounted on demand issues as coronavirus cases are rising around the world and new swine fever outbreaks were found in China, which raises concerns about import demand for feed but may aid meat import demand.
Corn and soybean futures trimmed steep overnight losses after USDA released its weekly export sales report. Net new sales of corn were 1.437 MMT in the week ended Jan. 14, up 51% from the prior four-week average and above the top end of trade estimates calling for 600,000 MT to 1.2 MMT. Mexico and Japan combined bought more than 1.0 MMT but China was absent. Soybean sales jumped sharply to 1.818 MMT last week, topping trade estimates for 750,000 MT to 1.5 MMT. Increases primarily to China with 864,100 MT registered which included 396,000 MT switched from unknown destination. New-crop sales jumped to 831,000, including 319,000 MT sold to China and 452,000 MT sold to unknown. Soymeal sales surged 39% to a marketing-year high of 468,500 MT from a week earlier. Wheat sales remained sluggish with at 329,600 MT, about 7% below the prior four-week average and at the lower end of trade estimates. China did buy 65,000 MT.
In Argentina, forecaster confidence is high for significant rains in northern Argentina during the next week, but southern Argentina will be dry with rising crop stress until some partial relief is likely in the second week of the outlook. In Brazil, conditions will continue to be mostly good for crops with a few exceptions.
AgroConsult trimmed its Brazilian soybean crop projection by 800,000 MT to 132.4 MMT and estimated the country will have around 4.5 MMMT to 5 MMT of 2020-21 beans available this month for export versus nearly 11 MMT last year at this time. The consultancy expects Brazil to ship 83 MMT of soybeans this marketing year, which is down 200,000 MT from its last forecast in November. AgroConsult expects Brazil’s 2020-21 corn crop to total 109 MMT, a 200,000-MT increase from its last projection. It expects the country to ship 39 MMT and speculated Brazil could begin shipping corn to China after a revision of sanitary protocols.
Before the reopening this morning, USDA announced two new export sales to China. Private exporters reported 136,000 MT of soybeans sold to China for old-crop delivery and 123,000 MT of sorghum, with 60,000 for old-crop and 63,000 for delivery in the 2021-22 season. The sales follow daily announcements of corn and soybeans to China and unknown destinations earlier this week. Those sales did not provide much last support so it will be critical to see tonight’s closes after strong weekly and steady daily USDA export sales data.
In the first year of the deal signed on Jan. 15, 2020, China fulfilled only 58% of those targets, according to an analysis of Chinese customs data by the Peterson Institute of International Economics (PIIE). Beijing committed to buy, over two years, at least $200 billion more worth of U.S. goods and services, compared with China’s purchasing total in 2017. Those purchases were to comprise agricultural and energy commodities, manufactured goods, and services. China reached 60% its $77 billion purchasing target for manufactured goods. Energy shipments ran at just 39% of what PIIE says was a $32 billion target. Farm product purchases reached 64% of the $36.6 billion agricultural purchase target.
Top Republicans urged Biden to take tougher action against China, after Beijing announced sanctions on outgoing American officials just minutes into Biden taking office. Senator Jim Risch (R-Idaho), ranking on the Senate Foreign Relations Committee, tweeted that in sanctioning 28 national security officials, China’s Communist Party was already testing the Biden administration’s “resolve to continue a tougher, competitive approach towards China… Together, Republicans [and] Democrats must show Beijing we will not be deterred from defending U.S. interests.” Biden’s National Security Council weighed in, calling the sanctions “unproductive and cynical.”
Hopes that activity can return to normal in the hardest-hit economies are becoming increasingly distant despite the progress being made on vaccinations. U.K. Prime Minister Boris Johnson signaled that the current lockdown in the country could last until the summer. German Chancellor Angela Merkel said it would be late September before everyone who wants to get vaccinated can get a shot. Anger is rising across Europe as the supply of Pfizer vaccines slows. Meanwhile, President Joe Biden warned that the U.S. could see 100,000 deaths from the pandemic in the next month and asked the nation to assume a "wartime" footing as he pressed Congress for more aid.
All the warnings and weak data are not falling on deaf investor ears, with markets around the world losing ground. Overnight the MSCI Asia Pacific Index slipped 0.7% while Japans Topix index closed 0.2% lower. In Europe the Stoxx 600 Index had dropped 1% this morning with every industry sector in the red. S&P 500 futures pointed to a loss at the open after hitting new highs on Thursday. Oil prices fell, retreating further from 11-month highs hit last week, weighed down by worries that new pandemic restrictions in China will curb fuel demand in the worlds biggest oil importer. After three straight days of losses, the dollar stabilized, and riskier currencies lost with business activity data in focus.
CORN: March fell withing 1 3/4 cents of the Jan. 20 low at $5.12 3/4. Prices rebounded from overnight lows but the key may be the closes tonight and price action early next week.
SOYBEANS: March beans also pared overnight losses into the break but still appear to be headed for the lowest close in three-weeks without additional recovery. A close below $13.52 in the March contract would validate potential for sizable tops to be forming. Malaysian palm oil futures eased on Friday and logged its second weekly loss, as tepid January exports data weighed on sentiment. Palm futures slumped 4.2% for the week. Dalians most-active soyoil fell 0.6%, while its palm oil contract slipped 1.2%.
WHEAT: Price action in wheat fits the theme across the grain markets that prices are forming short-term corrections or bigger tops with additional losses next week. SovEcon raised its 2021 Russian wheat crop projection from 76.8 MMT to 77.7 MMT, citing improved weather this month. But SovEcon also added the caveat that “overall conditions for the 2021 wheat crop remain far from ideal,” noting that plants headed into winter in the worst shape in a decade due to the dry fall. The 2020 wheat crop totaled 85.9 MMT. Russia’s Southern Region will continue to receive restricted amounts of precipitation during the coming two weeks. Totally dry weather is not likely, but the precipitation expected will do very little in reducing long term drought. Ukraine and areas in southeastern Europe have received sufficient amounts of moisture to improve the long-term moisture situation and sufficient precipitation is expected over the next couple of weeks to maintain the favorable situation.
Cattle: Steady to firm
Hogs: Steady to firm
Meatpacker JBS USA and chicken company Pilgrims Pride Corp said on Thursday they will pay $100 to U.S. employees who voluntarily receive a COVID-19 vaccine. JBS USA and Pilgrims Pride said internal surveys showed 60% to 90% of employees at individual facilities were willing to be vaccinated Rival meatpacker Tyson Foods said on Thursday it will offer vaccines on site at its facilities while employees are on the job.
Cattle: After rising to $120.20 yesterday, the market will confirm a cycle low with a close above $120.00 to close the week. USDA reported this morning that beef sales rebounded to 24,500 MT and included 4,300 MT reported sold to China and a supportive feature in early trading today. Today’s Cattle on Feed Report should remind of tightening supply prospects, with December placements expected to be down 3% from year-ago, following even bigger year-over-year dips in placements for November and October. Boxed beef prices rose yesterday with Choice up $2.29 and Select gaining $3.00 but sales slowed. Recent cash market weakness paired with rising boxed beef values have pushed processing margins to new records for January.
Hogs: Futures were able to post a higher close Thursday in all but the front-month. Look for a stronger start today after USDA reported 45,200 MT of pork sold last week, with Mexico and China the top buyers. Shipments also remains active at almost 41,000 MT. The pork cutout value rose $1.24 yesterday, but movement retreated to just 271.84 loads. Cash hog bids edged 18 cents lower nationally yesterday. Traders will focus on USDA’s monthly Cold Storage Report on Monday after the close. A new strain of African swine fever (ASF) has infected more than 1,000 sows on several farms owned by China’s New Hope Liuhe, the country’s fourth largest producer, as well as pigs at the country’s contract farms, says Yan Zhichun, the company’s chief science officer. Industry insiders indicate the new strain is likely caused by illicit vaccines. Yan says the new strains don’t kill pigs like the disease that wiped out nearly half the country’s 400-million-head herd in 2018 and 2019. Rather, they cause a chronic condition that reduces the number of healthy piglets born.
Corn: Up 4 to 9 cents
Soybeans: Up 12 to 17 cents
Wheat: Up 3 to 7 cents
GENERAL COMMENTS: Grains, soybeans are recovering from recent losses after a successful test of short-term support levels yesterday and talk end users increased forward coverage. Prices remain supported by the tightening U.S. and global supply stories that have driven corn to 7 1/2-year highs and soybeans and wheat to more than 6-year highs. However, volume was light overnight on the rally. Soybeans could face increased volatility as markets look for direction before the South American harvest begins in force. Argentine farmers have dramatically increased sales from the upcoming 2020/21 corn harvest, due to concern the government may yet again try to limit international sales. The agriculture ministry has caused uncertainty by going back and forth in recent weeks on policies seeking to ensure ample food supplies by limiting international shipments of corn. Wheat was supported by impending Russian export taxes, though expected precipitation across the United States and Black Sea region limited buying interest.
Before the reopening this morning, USDA made several new daily sales of grain and soybeans. Private exporters reported 356,500 MT of corn to unknown destinations, 136,000 MT of soybeans to China and 163,290 MT of soybeans to Mexico, all for old-crop delivery. Exporters also reported 138,000 MT of HRW wheat for new-crop delivery to Nigeria.
The corn sales may help confirm market talk yesterday that China was buying U.S. supplies after the price retreat. How the markets react to the sales today will tell important story about the overall strength of the markets.
Argentina crop conditions have improved over the past week, but parts of the nation will be drying down over this coming week leading to an increased need for rain especially in the central and south. Rain expected during mid- to late week next week will offer some partial relief, but more rain will be needed and continue into February. Brazil crop weather is steadily improving in key corn and soybean production areas. The only exception is in minor production areas of the northeast where net drying will continue. The trends will change very little over the next two weeks. Concerns remain for some increase of crop stress in southern Argentina.
Crop estimates have stopped declining in South America and that may limit new buying, especially in soybeans. IHS Markit raised its Brazilian soybean crop estimate by 500,000 MT to 133 MMT, noting positive productivity surprises in states like Goias, Mato Grosso do Sul and Minas Gerais. The firm is the latest to issue a crop peg in the 133 MMT vicinity. This week, StoneX lowered its soybean crop estimate to 132.6 MMT, with USDA projecting Brazil’s soybean crop at 133 MMT. On the high side, Datagro raised its production estimate 630,000 MT to 135.61 MMT this week.
The outside markets lean positive. Global stock indices climbed to all-time highs overnight on optimism that fiscal spending will revive economic growth and bolster corporate earnings. S&P 500 futures are little changed this morning after the gauge posted its best first-day reaction to a presidential inauguration since at least 1937. However, there are warning signs that the surging global markets are getting ahead of the real economy. Exchange-traded funds covering developing-nation assets drew the highest inflows in more than a year last week, with traders increasing their holdings by a combined $3.56 billion, according to data compiled by Bloomberg. The 14-day relative strength index for the MSCI Emerging Market equity gauge increased to 83 on Thursday, its 17th straight day above the threshold of 70 that signals to some traders gains have been excessive. At the same time, Bloomberg’s Fear/Greed indicator, which measures selling strength versus buying strength, for the MSCI measure, has climbed to the highest level since October 2011.
Crude oil dipped lower overnight as the demand outlook in some of the world’s largest economies remained fragile. Futures were down 0.5% after JPMorgan Chase cut demand estimates for Chinese oil as lockdowns spread ahead of the Lunar New Year travel rush. The Dollar Index fell six-session low, extending declines for a third day and providing an underlying floor under grain prices.
CORN: March fell below the upside gap left Jan. 13 and then pared losses yesterday. Prices opened lower last night and rebounded back above yesterday’s highs and tested last week’s close at $5.31 ½ ahead of this morning’s break.
SOYBEANS: March beans also opened lower last night but rallied and are near the overnight highs at the break. Both November beans and March soymeal futures have not risen back above yesterday’s highs and that will be something to watch today for confirmation of underlying strength at yesterday’s lows. Malaysian palm oil futures climbed 1.9% on Thursday, recovering from two-and-a-half-month closing low yesterday as heavy rains and flooding in the top two producing countries stoked concerns over output. But industry players and analysts are anticipating production to recover in the second half of the year. Dalians most-active soyoil contract gained 0.6%, while its palm oil contract fell 0.1%. China’s soymeal futures closed slightly lower.
WHEAT: Futures traded inside of Wednesday’s range overnight, failing to generate much enthusiasm. Export prices for Ukrainian wheat rose $2 to a range of $292 to $303 per metric ton, free on board, the analyst APK-Inform reported today. “The move was facilitated by a significant rise in the cost of the Russian grain and increasing the competitiveness of Ukrainian,” the consultancy explained. Russian wheat prices have shot higher over the past week in anticipation of the Feb. 15 tax. A Kremlin spokesman indicates supply restrictions to tame food prices have been effective. Plenty of precipitation will fall across the western CIS during the next ten days keeping snow depths on the rise in western Russia and neighboring areas. Melting snow and a combination of frequent rain and snow will prevail across Romania, Bulgaria, Ukraine and Moldova during the next ten days to two weeks ensuring moisture abundance in the spring. Russia’s Southern Region, however, is not expected to get large amounts of moisture leaving significant moisture deficits in the ground. The same is suspected in Kazakhstan.
Cattle: Steady to firm
Hogs: Steady to weak
Cattle: Cattle futures saw choppy to lower trade at midweek, but feeders were bolstered by softer corn prices. Higher corn futures today will likely weigh on feeders. Traders are increasingly looking ahead to USDA’s Cattle on Feed Report on Jan. 22, which will be followed by the department’s Cattle Inventory Report a week later. The former is expected to show a 3% annual drop in Placements for December and a 0.6% pullback in the number of cattle on feed as of Jan. 1. Cash cattle trade got underway yesterday near steady with action last week and an improvement after some light sales at softer prices in Iowa yesterday. Choice and Select boxed beef values climbed another $1.42 and 84 cents, respectively, on Wednesday and movement was a moderately active 136 loads.
Hogs: Lean hog futures rallied sharply at midweek, with most contracts forming larger reversals to the upside. A close above last week’s high would be a new buy signal to chart watchers. Trader optimism is growing that cash prices will put in a seasonal low soon. Hog bids climbed 82 cents nationally on Wednesday. The pork cutout value climbed $1.60 on Wednesday, but movement slowed a bit to 359.84 loads. Weekly pork prices still climbing in China, with prices just 2.2% under last year’s elevated levels. Traders will have to wait until Friday for USDA’s weekly export sales update for guidance as to whether China is still buying U.S. pork for its spring festivals. China’s ag ministry today reported an outbreak of African swine fever in the southern province of Guangdong. The outbreak occurred at a farm with 1,015 pigs, and the ministry indicated illegal transportation of pigs was to blame. We’ve heard reports the country is still dealing with the virus that wiped out around half of China’s hog herd beginning in 2018, but official reports on the outbreak have largely ceased.
Corn: Down 9 to 12 cents
Soybeans: Down 28 to 33 cents
Wheat: Down 9 to 15 cents
GENERAL COMMENTS: Soybeans tumbled overnight extending large declines Monday and falling below last week’s lows as trade volume intensified on the decline. March soybeans are now looking more like a “buy-the-rumor, sell-the-fact” rally failure after bullish USDA data last week. Corn fell sharply and below the potential exhaustion gap left Jan. 13. Recent fund buying and rising open interest are typically seen at important tops and what price action follows during the next few weeks will be very important in defining whether those tops are temporary or major.
Before the reopening this morning, USDA did not announce any new daily sales of grain or soybeans. End users are breathing a sigh of relief and now the market direction will depend on when they start buying. Market bulls expect it to come sooner than later. Actual new sales confirmations may be required to halt the current break in prices.
Argentine forecasts ironically look a little drier after last weekend’s rains provided critical relief and the trade is now looking at better yield potential in Brazil and the nation’s ability to fill Chinese import needs in the coming months. Argentina will see some rain chances move in during the 6- to 10-year period, but only really for fringe crop areas, with the heart of the belt dry this week, weekend, and through next week. Moisture shortages will re-build quickly. Central Brazil saw more rains over the last 24 hours, continuing center-north over the next five days, and the then the rains shift south later next week.
Export companies in Argentina are concerned about independent truck owners who are blocking roads as part of a protest over what drivers say are exorbitant taxes and highway tolls, the CIARA-CEC export industry chamber said on Tuesday. Owners and drivers, grouped in the informal TUDA association began blocking highways over the weekend, making it hard for grains to reach port terminals. The protest adds uncertainty to a sector that was racked by several Argentine port workers strikes last month.
Brazils soy production forecast at record of 135.61 MMT, up from 134.98 MMT in a previous forecast from consultancy Datagro. Brazils total corn output in 2020-21 season was cut to 109.93 MMT from 114.04 MMT in Datagram’s previous forecast. Last week, USDA forecast maintained its Brazilian soybean crop at 133 MMT, up from 126 MMT last season. Corn was reduced 1 MMT to 109 MMT from 102 MMT harvested a year ago.
Meanwhile, Brazil will likely export 2.398 MMT of corn in January, forecasts the association of grain exporters ANEC. This represents a 267,000 MT jump from its forecast last week. The group expects Brazil to export 1.027 MMT of soybeans during January, which is a 25,000 MT decline from its forecast last week.
China imported 25.89 MMT of soybeans from the United states in 2020, a dramatic 52.8% jump from the 16.94 MMT it purchased from the States in 2019, according to customs data out today. The annual tally included 5.84 MMT in U.S. bean deliveries in December, an 89% jump from year-ago. China’s 2020 soybeans from Brazil were even stronger at 64.28 MMT, an 11.5% jump from the year prior. This helped push China’s total soybean imports for 2020 to a record-high 100.33 MMT. Strong Chinese bean purchases are expected to continue as it works to rebuild its hog herd and fulfill purchase commitments under the Phase 1 trade deal.
China is focused on boosting exports of manufactured goods to the U.S. and elsewhere. Domestic consumption has lagged, with retail sales shrinking 3.9% in 2020 from the previous year and demand for imported goods falling slightly. Following the pandemic, many Chinese employers cut salaries or hours, leaving consumers anxious. Many opted to save more. China’s government also didn’t hand out checks to consumers as the U.S. did, choosing instead to focus stimulus on helping factories and other businesses, the Wall Street Journal reports
The outside markets lean slightly positive this morning. U.S. equity futures rose with European stocks on Wednesday, buoyed by earnings and hopes for more stimulus. Investors are counting on more spending to help propel economic growth under incoming President Joe Biden, who is to be sworn in at noon Wednesday in Washington and is planning a flurry of executive orders on his first day. Still, it won’t be all smooth sailing, with Biden’s Treasury Secretary nominee Janet Yellen encountering early Republican resistance to the new administration’s relief plan in her confirmation hearing to become Treasury secretary. Crude oil prices inched higher and the dollar was holding steady below key short-term resistance.
CORN: March corn traded down below the gap left Jan. 13 at $5.17 1/4 to $5.22 1/4 overnight. Stronger support is expected at $5.02 3/4 to $5.00 with the key support at $4.89 3/4. Ukrainian grain traders said on Tuesday they saw no grounds to restrict corn exports for the 2020-21 season, a move requested by animal feed and meat producers to avoid higher feed prices. Ukraines economy ministry and agricultural unions will decide on Jan. 25 whether to limit corn exports to 22 MMT. The U.S. Environmental Protection Agency (EPA) on Tuesday granted three waivers to oil refiners that exempt them from U.S. biofuel blending obligations, a last-minute move before President Donald Trump leaves office on Wednesday. The agency granted two waivers for the 2019 compliance year and one waiver for the 2018 compliance year. The announcement followed four years of controversy around the waiver program under the Trump administration but left many questions unresolved. Some 30 waiver requests remain outstanding for 2019 and 15 for 2020, which the incoming Biden administration will need to deal with. received the exemptions. The Renewable Fuels Association (RFA) reacted harshly to the action, noting the approval of the 2019 SREs reduced U.S. biofuel demand by 150 million gallons and the 2018 reversal resulted in the additional loss of 110 million gallons of renewable volume blending.
SOYBEANS: March soybeans opened slightly lower and fell below last week’s low at $13.54 near this morning’s break. A close below that level would be negative and a weekly close would target stronger support at $13.00 and then $12.50. Malaysian palm oil futures fell as much 3.3% on Wednesday to close at their lowest level in more than two months, as concerns over dismal Jan. 1-20 exports data offset support from supply disruptions due to floods. Prices ended 1.4% lower to its lowest since Nov. 9. Exports of Malaysian palm oil products for Jan. 1-20 fell 43% from the same period in December, as China curbed purchases. China’s Dalian most-active soyoil contract fell 2%, while its palm oil contract tumbled 3%.
WHEAT: Futures followed the weaker trends in corn and soybeans, falling to a three-session lows, but holding above short-term support. Russia’s 2021 grain crop will likely total 131 MMT, Interfax news agency reports, citing Deputy Prime Minister Victoria Abramchenko. That would be a 2 MMT retreat from the 2020 crop.
Cattle: Steady to firm
Hogs: Steady to weak
Tyson Foods Inc. said it would pay $221.5 million to settle price fixing litigation with two additional groups of plaintiffs who accuse the company of illegally conspiring to inflate chicken prices. This comes just over a week after Tyson agreed to settle related antitrust claims by purchasers who bought chickens directly from the company. Courts must still approve the latest settlement. Tyson and other chicken industry companies faces a number of lawsuits involving restaurants, supermarkets, food distributors and consumers who accuse chicken producers of having conspired since 2008 to inflate chicken prices.
Cattle: Cattle futures rallied to resistance Tuesday and a close above $119.90 basis April futures would be a new buy signal. This week’s kill is off to a lighter start with 229,000 head processed versus 245,000 head the year prior. Downtime for plant maintenance and Martin Luther King Jr. holiday clipped processing to start the week. Last week’s cash price was $1.75 lower than the prior week, the 5-area average $109.51, over $24 cheaper than 2020 for the same week. On top of the contracts and formula cattle, packers own a lot of inventory and they intend to use it to keep a lid on cash prices over the next few weeks. Boxed beef values climbed 60 cents (Select) to $2.45 on Tuesday, with a moderate 148 loads changing hands. Total boxed beef sales the past two weeks have been better than a year ago. Choice boxed beef prices averaged higher last week than one year ago. Strength in boxed beef prices could continue through this week before another seasonal set back begins. Weaker corn prices will continue to support feeder cattle futures.
Hogs: The failure to build on the strong gain to end last week on Tuesday was a negative chart development. Today is an important session for market bulls to find support and halt yesterday’s drop. The pork cutout value dropped $1.10 on Tuesday, but movement jumped to 404.67 loads. Declines in hams and bellies offset gains in other cuts. Average cash hog bids fell $1.04 on Tuesday.
Corn: Down 1 to 3 cents
Soybeans: Down 8 to 19 cents
Wheat: Up 7 to 10 cents
GENERAL COMMENTS: Wheat futures continue to gain support from the higher Russian export tax that is due to come into force in March, while that news that China sold essentially all the wheat auctioned from state grain reserves last week near an equivalent of $10.50/bu. solidifies the demand outlook from China and a rush by domestic feed users to find a substitute for record-priced corn supplies, near $11.20 a bushel. This should favor both imports of wheat and corn. Further support comes from the rising prices in Russia as exporters scramble for supplies ahead of the taxes. The charts closed well off their highs on Friday with momentum starting to turn down and grain prices did not recovery above those highs overnight. Grain and soy markets are now at price levels where there is significant downside risk from slower demand and leading to longs exiting long positions.
The two most important factors in grain price outlooks are weather and government actions. South American weather for the week ahead has general rains over most of the Brazilian areas except the northeast and after beneficial rains last weekend, the Argentine forecasts have showers this weekend over the eastern ag areas. On the wheat front, a protective blanket of snow fell for most winter wheat crop regions in Russia with light snow leading to some concerns of winterkill losses in Ukraine. Ukrainian grain traders said on Tuesday they saw no grounds to restrict corn exports for the 2020-21 season, a move requested by animal feed and meat producers to avoid higher feed prices. Ukraines economy ministry and agricultural unions will decide on Jan. 25 whether to limit corn exports for the 2020-21 marketing season to 22 MMT.
Meanwhile, Reuters reported late last week that the Trump Administration was mulling a blanket waiver of biofuel requirements for 2019 and 2020 to help oil refineries “weather” the impact of the COVID-19 pandemic. Meanwhile, few signs that Mexican livestock producers are making progress to reverse a proposed government ban on GMO corn imports.
CFTC data on Friday showed funds were smaller buyers in corn in the week ended Jan. 12 and cut bullish bets in soybeans and wheat. Money managers boosted their net long in corn futures and options to 374,714 contracts up nearly 25,000 from a week earlier and the biggest bullish bet since March 2011. Meanwhile, commercial end users in the same week extended their outright long position by nearly 72,000 corn contracts. Funds cut their net long in soybean futures and options by about 9,300 contracts to 166,485 contracts, the smallest bullish stance since the first week of September. Funds reduced their net long in SRW wheat to 16,987 futures and options contracts from 25,210 a week earlier.
Before the reopening this morning, USDA announced three daily export sales. Private exporters reported selling 132,000 MT of soybeans to China for delivery in the new-crop season. USDA said 128,000 MT of corn to Japan and 100,000 MT of corn to Israel for old-crop delivery. The daily sales should provide early support but last week’s sales announcements failed to give a last boost to corn and soybeans.
On the economic front, China’s gross domestic product jumped 6.5% in the final quarter, topping forecasts and pre-pandemic growth rates. By comparison, China’s GDP rose by 3.2% and 4.9% in the second and third quarters of the year, respectively, after suffering a historic 6.8% contraction in the first. The data means the Chinese economy was the only major one to avoid contraction in 2020, growing by 2.3% in 2020, but it was the country’s weakest annual economic expansion since Mao Zedong’s death in 1976. Forecasters expect China to grow by another 8% or more in 2021 as other parts of the economy continue to make up for the lost time last year.
The U.S. International Trade Commission (ITC) has begun an investigation into allegations that a Chinese company is importing genetically engineered rice seeds for medical uses that copy patented technology owned by Kansas developer Ventria Bioscience, Bloomberg reported. The new complaint accuses Wuhan Healthgen of copying manufacturing techniques covered by two U.S. patents. Commission investigations typically take 15-months.
U.S. investors missed little during yesterdays holiday, as news of strong economic data from China was met with a mixed reaction amid reports of further American measures against Chinese tech companies. S&P 500 futures pointed to plenty of green at the open and the 10-year Treasury yield rose slightly to nearly 1.11%, but still down from the 10-month high hit last week at 1.187%. Crude oil is holding above $52 a barrel and the dollar is slightly lower this morning. Global markets climbed ahead of Treasury Secretary nominee Janet Yellen’s confirmation hearing in which she’s expected to call for expansive government action to bolster the U.S. economy. Yellen is expected to speak before the Senate Finance Committee at 10 a.m. in a discussion likely to cover topics including President-elect Joe Biden’s $1.9 trillion Covid-19 relief plan. Yellen will tell them that low borrowing costs mean it’s time to “act big,” according to her prepared remarks.
CORN: March corn traded in a 9-cent range overnight with all of it marked in the first hour of trading last night. Prices have slipped back into the red ahead of the break. Key short-term support this week is the bottom of the gap left Jan. 13 at $5.17 1/4 with resistance at that session’s high and 7.5-year high at $5.41 1/2.
SOYBEANS: March soybeans fell to a four-session high but remain well above support at $13.54 after touching $13.85 overnight and settling near $13.97 at the break. Last week’s 6 ½-year high at $14.36 1/2 remains key overhead resistance. Malaysian palm oil futures fell 2.3% on Tuesday, closing at its lowest in almost two months, on worries over weakening exports ahead of cargo surveyor data. Palm has fallen for six sessions out of seven and closed at its lowest level since Nov. 26.
WHEAT: Futures have drifted down from the stronger overnight gains into the break after failing to rise above Friday’s new 6-year highs. Russias decision to raise and extend a tax on wheat exports deals a blow to importers and consumers, as higher prices for the staple stoke food inflation in economies reeling from the COVID-19 pandemic. The World Bank said last month that food price increases, combined with reduced incomes, had aggravated chronic and acute hunger, hitting vulnerable households in almost every country. Buyers in southeast Asia, including the worlds number two importer Indonesia, will rely heavily on Australia, which has harvested a near-record crop.
Hogs: Steady to weak
Cattle: Cattle closed last week with solid gains with momentum pointing higher but deferred futures are leading. Follow-through strength this week through above resistance will confirm cycle lows. Some beef processing plants will reportedly take some downtime for plant maintenance, this week, which resulted in steady to lower cash prices last week. Margins shot to $205.05 a head on Friday, an impressive $83.55 jump from the week prior as the combination of softer cash prices and rising beef values padded processors’ margins. Stronger corn prices will weigh on feeder cattle and firmer cash slaughter cattle bids are needed to provide underlying support.
Hogs: Friday’s kill slowed notably as some areas of Iowa and Minnesota were hit with a blizzard. Cash hog bids slipped $1.26 nationally for the state, with slowed movement Friday keeping pressure on cash bids to close last week. Slaughter slowed 6.8% the week ending Jan. 16, but last week’s kill of 2.654 million head was still up 6.3% from year-ago. Average hog weights are 4 lbs. above year-ago levels. The pork cutout value dropped 48 cents on Friday, capping a drop of nearly $2.50 last week as movement slowed to 336 loads. China produced 41.1 million tons of pork in 2020, down only 3.3% from 2019, as its domestic hog herd recovers from African swine fever (ASF), according to the National Bureau of Statistics. That compares to a 21.3% drop in pork production the year prior. China’s hog inventory stood at 406.5 million at the close of 2020, a 31% increase from the previous year’s depressed level. Meanwhile, the Philippines is looking at increasing the 54,000 MT of pork it imports annually, Agriculture Secretary William Dar said. Deliveries to the main Luzon island are being rushed, while a program to repopulate hogs is underway to curb prices as pork production is expected to continue falling this year due to African swine fever.
Corn: Steady to down 2 cents
Soybeans: Down 3 to 8 cents
Wheat: Up 5 to 12 cents
GENERAL COMMENTS: wheat futures jumped higher overnight on speculation demand for U.S. grains from overseas buyers will expand on Russian export uncertainty. Russian news agency Interfax reported the Ag Ministry told its exporting unions that wheat export tariffs could be now extended on through the marketing year change on July 1. In the meantime, wheat export taxes will double on March 1, up from 25 euros MT from Feb 15-March 1 to 50 euros ($60.68 MT) on March 1 forward. The ministry also will impose taxes on corn and barley exports. Russia is trying to reduce domestic food prices with the wheat export levy as well as a grain export quota and a series of other measures after President Vladimir Putin criticized the impact of excessive inflation.
Turkey, Egypt and Bangladesh are the largest importers of Russian wheat. Russia exports to several southeast Asian nations such as the Philippines which Australia is certainly capable of servicing due to the relatively short shipment route. Paris milling wheat futures are trading at, the highest since May 2013. Approximately 4Mt of wheat was offered at the Chinese state grain auction this week, with 3.95 MT sold (99.7%). Soaring corn prices are resulting in a resurgence in wheat demand.
Before the reopening this morning, USDA announced daily export business. Private exporters reported to USDA they sold 318,000 MMT of soybeans to unknown destinations for new-crop delivery and 111,000 MT of corn to Mexico for old-crop delivery. It will be important to see the markets show a positive response to the sales after the break or it could trigger some fresh profit taking.
Corn futures are for their biggest weekly gain since July and soybeans are on track for their fifth straight weekly advance after USDA lowers U.S. and world carryover forecasts on Tuesday. Soybeans continue to hold underlying support levels on speculation the shift to Brazilian supplies next month may be slowed by a pending truckers strike starting Feb. 1. Prices have drifted back from overnight highs into the break this morning on profit taking amid less threatening weather in South America.
In Argentina, a meaningful and needed rain event will occur in much of the nation Friday through Saturday. An exception will be in La Pampa; though, some locally meaningful rainfall fell overnight. However, a lengthy period of dryness will still follow the rain event leading to some increase of crop stress, especially in pockets of the region that miss out from getting much rain this week. Rain is still likely to return to Argentina in the last week of this month.
Argentinas wheat harvest is expected at 17 MMT, up from 16.5 MMT estimated in December, thanks to record yields in southeast Buenos Aires province, the Rosario grains exchange said on Wednesday. The exchange expects 47 MMT of soy this season and 46 MMT of corn. The exchange said in its weekly crop report that 97.5% of expected 2020-21 soy planting area had been sown so far, along with 90.9% of expected corn area.
In Brazil, conditions will still be very good in most areas. Some pockets of Rio Grande do Sul may become a little too dry occasionally; though, rain will occur often enough to prevent crop stress from becoming serious. There will also still be notable dryness from eastern Minas Gerais into north-central and northeastern Bahia; though, this is outside of the most important grain, oilseed, and cotton production areas.
Worries about U.S.-China relations are back on the front burner. Chinas blue-chip stocks eased on Friday, snapping a four-week winning streak, as worries over Sino-U.S. tensions and a surge in COVID-19 cases weighed on investor sentiment. The Trump administration in its waning days took another swipe at China and its biggest firms on Thursday, imposing sanctions on officials and companies for alleged misdeeds in the South China Sea and an investment ban on nine more firms. China reported the highest number of daily COVID-19 cases in more than 10 months, official data showed, due to a severe outbreak in the northeast that has put more than 28 million people under lockdown. Chinese foreign ministry spokesman Zhao Lijian said in Beijing on Friday that China firmly opposed the new sanctions. "This action is against the trend of the times and is against its self-touted market competition and international economic trade rules," he said. The Biden transition team did not immediately respond to a Reuters request for comment.
Outside financail markets are providing little incentive for fresh buying in the grain markets this morning. U.S. stock index futures dropped with weakness in Europe and Asia as President-elect Joe Biden’s much-anticipated $1.9 trillion Covid-19 relief plan came under scrutiny. The dollar pushed higher and Treasury yields declined. Contracts on the S&P 500 Index held their losses after December retail sales date came in worse than expected. Optimism about the U.S. aid package had helped spur the reflation trade, but the plan is far from a done deal. Biden’s proposal could be watered down under congressional opposition, and there’s the possibility that some taxes could rise. The dollar recouped most of Thursday’s decline on comments by Federal Reserve Chairman Jerome Powell indicating that a rate rise is off the agenda.
CORN: March corn matched yesterday’s high at $5.36 ½ overnight, failing to test the spike high on Wednesday at $5.41 ½. Look for a choppy session as traders wait to monitor weekend rains in South America. EPA signals it will wait on courts before deciding on 2019 SREs and extends RFS compliance deadlines. There has been a flurry of reports from various news outlets this week about the EPA’s intentions to grant around 22 of the pending 32 small refinery exemptions (SREs) to the Renewable Fuel Standard (RFS) for the 2019 compliance year, prompting backlash from farm and ethanol groups. “While we don’t agree that EPA needs to wait as long as it is proposing, particularly for the 2020 compliance year, we do agree with EPA that the outgoing administration should refrain from any further action on the pending small refinery petitions,” said Geoff Cooper, president of the Renewable Fuels Association.
SOYBEANS: For a second session, March soybeans have failed to rise above the spike high at $14.36 ½ overnight. A close below yesterday’s low at $14.03 would be disappointing to market bulls. A close near current level tonight would merely suggest a period of consolidation to work off grossly overbought technical momentum. Later this morning, members of the National Oilseed Processors Association will likely report they crushed 185.175 million bu. of soybeans in December, which would be the second-largest crush on record for any month, according to analysts surveyed by Reuters. Soyoil stocks are expected to climb to a six-month high of 1.712 billion lbs. for the end of November, a 154-million-lb. increase from November but a 45 million lb. retreat from year-ago. Malaysian palm oil futures fell as much as 3% on Friday and logged a 10.6% drop this week, their biggest weekly decline in 10 months. Exports during Jan. 1-15 plunged 42% from the same period in December, cargo surveyors said. The data was within market expectations, but sentiment has turned bearish. Dalian’s most-active soyoil contract fell 2%, while its palm oil contract slipped 4%. Soyoil prices on the Chicago Board of Trade were down 1.2% ahead of the break.
WHEAT: Futures have backed off the overnight highs into this morning’s break. Some of the selling reflects profit taking after futures hit new 6-year highs overnight. Weather is becoming the focus. Colder weather expected in Russia and Ukraine over the next couple of weeks should not adversely impact winter crops because of deep snow cover. Russia’s Southern Region will get additional rain through the weekend further improving the potential for crop development in the spring – at least in areas that got planted and established favorably during the autumn. No threatening cold is expected in Europe or China during the coming week. India’s weather will trend a little dry over the next ten days, but wheat and other winter crops are favorably rated. U.S. wheat areas in the central and northwestern Plains may pick up a little snow cover in the next two weeks as gradual cooling occurs. The snow will help protect crops from any bitter cold that might evolve.
Hogs: Steady to weak
Cattle: Choice and Select boxed beef values posted solid gains of $2.37 and $2.01, respectively, on Thursday, with movement slowing to 137 loads. Both grades are up notably for the week. Meanwhile, the cash market weakened further on Thursday, with prices in the Iowa market slipping to $106 to $108 and Kansas seeing some trade at $109. Some plant maintenance is reportedly planned for the weeks ahead, curbing packer buying interest but forcing some feedyard to accept lower prices to keep pen current. Today’s close in futures will be important. A firm close would suggest this week’s setback is merely a retest of potential cycle lows last week.
Hogs: Heavy slaughter weights continue to pressure packer bids and may limit new buying interest in hog futures today after capping the upside in product trade. Yesterday, the pork cutout value rose $2.42, but movement slowed to 288.33 loads and the cutout is still a bit lower for the week. Cash hog bids dropped another 50 cents yesterday. That has kept traders focused on narrowing nearby futures’ premiums to the CME lean hog index. Uncertainty about export demand also remains a weight on futures to end the week.
Corn: Down 3 to up 2 cents
Soybeans: Up 3 to 10 cents
Wheat: Steady to weak
GENERAL COMMENTS: Corn futures opened lower and are trading with mixed trends at the break this morning with old-crop firm and new-crop on the defensive. Soybeans are steady to higher with new-crop futures showing the most strength. Traders are looking for a new spark after recent active fund buying likely pushed their bullish bets near or above prior records. Argentine farmers called off a three-day-old sales strike on Wednesday, hours before it had been scheduled to end, after the government agreed to free corn exports from a recently decreed limit of 30,000 MT a day. The export cap that had been imposed at the start of the week was criticized by growers who said it would weigh on production. 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.
CME Group raised maintenance margins on corn futures from $1,100 to $1,300 for March 2021. The exchange will also raise maintenance margins on wheat futures from $1,650 to $1,800 for March futures. The changes take effect after the close of business today. Higher margins suggest increasing market volatility ahead.
Argentina was dry over the past 24 hours, but better rain is on tap tomorrow and Saturday to improve dry conditions there. Forecasts look much drier again into late January. Brazil saw scattered rains in the northern half of crop areas yesterday, with increased and widespread rains forecast during the next five days, and less coverage from Jan. 20 to Jan. 25, but good chances still for the heart of the Brazilian growing region. Commodity Weather Group warned yesterday of a return to dry weather for center-west Brazilian soybean areas, despite better rains there through the weekend and hanging on next week.
The Rosario Grains Exchange lowered its 2020-21 corn crop estimate 2 MMT to 46 MMT amid ongoing concerns about dryness. It also raised its wheat crop forecast from 16.5 MMT to 17.0 MMT. The exchange pegs the Argentine soybean crop at 47 MMT.
The Russian Agricultural Ministry is reported to be meeting on Friday to discuss increasing the wheat export tax, with reports indicating that it could be increased to 45 euros per MT (~$55 MT) as domestic prices in Russia continue to rise. A further increase to the size of the quota would likely to be supportive for global prices as suppliers are expected to take the brunt of the tax and are likely to increase prices to compensate for this. Further to the wheat tax, reports indicate Russian also planning on a tax on barley and corn.
Before the reopening this morning, USDA did not announce any new daily export sales after reporting new business for soybeans to unknown and China earlier this week.
This morning’s weekly USDA export sales data were better than expected for corn, soybeans and soymeal. Private exporters reported net soybean sales rose to 908,000 MT in the week ended Jan. 7, up 93% from the prior four-week total and topping pre-report estimates for 300,000 to 700,000 MT. China topped the buyer list with 758,300 MT, but that included switching 264,000 from prior sales to unknown and decreases of nearly 80,000 MT. New-crop sales fell in the middle of trade estimates with 326,000 MT sold last week. Soybean meal sales rose to a marketing-year high of 337,400 MT, topping trade estimates for 100,000 to 300,000 MT. Corn sales rose 34% above the four-week average to 1.438 MMT, above the top end of trade estimates calling for 700,000 MT to 1.2 MMT. Japan was the top buyer of 401,400 MT with 334,500 MT sold to unknown. Wheat sales were disappointing at 221,900 MT last week, down 49% from the prior four week average and below the low end of trader estimates.
China’s export boom continued into December, pushing the trade surplus to a record high in the month and bolstering what is already the world’s best-performing major economy. China imported record amounts of soybeans and meat in 2020. Chinese customs data showed the country imported a record-setting 100.33 MMT of soybeans in 2020, an 11.82 MMT (13.3%) jump from 2019. China’s efforts to rebuild its hog herd and the Phase 1 trade deal helped fuel the surge. In December, China imported 7.52 MMT of the oilseed, which was down 2.02 MMT from year-ago China also imported a record-high 9.91 MMT of meat in 2020, a 60.4% surge from last year. December imports climbed 24.4% from November to 964,000 MT. Of course, a Chinese customs spokesman indicated Chinese imports of U.S. ag products surged 66.9% in 2020 in yuan terms, with bean imports from the U.S. up 56.3%, cotton imports up 121.7%, pork imports up 223.8% and crude oil imports up 88.0%.
Meanwhile, the U.S. Chamber of Commerce sees "every indication" that a high-ranking delegation of Chinese officials will visit Washington early in the administration of President-elect Joe Biden, a top Chamber official said on Wednesday. Myron Brilliant, head of international affairs for the business group, told reporters such a visit could help lay the groundwork for improved relations between the United States and China and progress in an expanded trade agreement.
CORN: March corn opened lower touching $5.19, in the middle of the upside gap left on Tuesday at $5.17 1/2 to $5.22 1/4. It will take a close below $4.89 1/4 to signal at least an interim market top. In response to recent reports that EPA intends to grant “some” SRE waivers for the 2019 compliance year in the final days of the Trump Administration, the RFA has asked the agency to hold off on taking any action until the U.S. Supreme Court visits the 10th Circuit Court ruling. RFA told EPA that it will take legal action if the outgoing administration grants 2019 waivers before the 10th Circuit case review stating the decision “remains the most definitive legal pronouncement on whether and when exemptions can be extended. It makes no sense to consider granting any exemptions unless and until that decision is modified.”
SOYBEANS: March opened about steady but uncovered buying on weakness and selling on small gains. The market is overbought and today’s action after good export sales data will be an important near-term indicator. December’s NOPA soybean crush is expected to come in at 185.2 million bushels tomorrow morning, up from 181.0 million in November and 174.8 million a year earlier. Trade estimates range from 182.0-188.5 million bushels. Malaysian palm oil futures fell as much as 5% on Thursday to hit a more than two-week low on fears of a deep cut in January exports after a top Chinese diplomat said on Wednesday that China would import more Indonesian products and increase investment in Southeast Asias largest economy, responding to Jakartas request to remove barriers and help balance the trade between the two countries. Dalian and Bursa palm prices are already suffering due to poor Chinese demand, as recent lockdowns in the worlds second largest palm buyer are likely to lower consumption during the Chinese New Year holiday next month. China’s Dalian soybean oil futures fell 3% while palm oil futures fell 3.7%.
Hogs: Steady to weak
Since November, more than 20 million chickens have been destroyed in South Korea and Japan due to a devastating outbreak of highly pathogenic H5N8 bird flu. The virus reached India last week, and 10 states have already reported cases. India is the world’s sixth largest poultry producer. The worst bird flu outbreak for Asia since the early 2000s coincides with the Covid-19 pandemic that at least initially clipped demand for poultry. The outbreak may help to boost demand for U.S. meat and poultry supplies.
Cattle: Cash cattle trade got underway yesterday, with prices ranging a buck or two lower compared with last week’s trade, but the retreat wasn’t a surprise to futures traders amid this week’s setback. A couple of maintenance projects are rumored to start this weekend at two Kansas plants, reducing demand but motivating feedyards to sell cattle at lower prices as corn prices rose to 7 ½-year highs. Choice and Select boxed beef values climbed $1.86 and 97 cents, respectively, at midweek, with moderately active 143 loads changing hand. Beef sales in the week ended Jan. 7 were modest at 16,800 MT with South Korea the top buyer but China also reported buying 2,800 MT.
Hogs: The front month’s premium to the cash market weighed on nearby contracts, but deferred months performed better on Wednesday, despite rather disappointing fundamental stories. Cash hog bids softened 52 cents nationally at midweek as elevated hog weights and ample supplies continued to limit the cash market’s upside. The pork cutout value also fell $1.06 on Wednesday, with bellies dropping $15.24. Movement slowed to 383.42 loads. USDA said pork sales last week were sluggish at 23,800 MT with no large sales to China. Shipments were strong at 30,008 MT with China shipping 11,500 MT.
Corn: Up 16 to 22 cents
Soybeans: Up 3 to 9 cents
Wheat: Up 4 to 8 cents
GENERAL COMMENTS: Corn futures gapped higher overnight, extending the limit up gains on Tuesday to the highest since July 2013 after USDA data showed smaller supplies and better demand. Soybeans also extended gains, touching a new 6-1/2-year peak, after the USDA confirmed tightening U.S. supplies of the oilseed. Wheat notched up a new six-year high, supported by uncertainty over Russian export policy.
USDA cut its estimate of 2020-21 U.S. corn production below average trade expectations, while also projecting lower-than-expected U.S. corn stocks at the end of the season. The record yield reduction in January, falling 3.8 bu. to 172.0 bu. was shocking. But an even bigger surprise was record use in the first quarter of the season implied by Dec. 1 inventories falling below last year and the lowest trade estimate. It also reduced its outlook for the corn harvests in Brazil and Argentina, which continue to face dry weather threat. USDA also raised its forecast for Chinese corn imports to a record 17.5 MMT, up 1.0 MMT from December and 7.6 MMT last year. Traders are still betting that number ultimately moves higher. The USDA also lowered estimated U.S. soybean production and ending stocks, along with U.S. and world wheat inventories.
Before the reopening this morning, USDA announced soybean sales. Private exporters reported new sales of 396,300 metric tons to unknown destinate for old-crop delivery and another 68,000 MT sold for new-crop delivery to unknown destinations. That followed 120,000 MT of beans sold to unknown for old-crop delivery on Tuesday, 132,000 MT announced sold to China on Monday and 204,000 MT of soybeans old to China announced last Friday. The sales announcement will give soybeans a fresh boost this morning.
Brazil will likely export 1.052 MMT of soybeans in January, a 37% retreat from shipments of 1.669 MMT in January 2020, forecasts ANEC. Slow spring seeding and aggressive exports earlier in the season mean Brazil currently has limited supplies of soybeans for export. The association representing Brazil’s grain exporters expects the country to ship 1.775 MMT of corn this month, near in line with year-ago levels.
The market remained focused on weather prospects in South America, with rainfall forecasts in Argentina closely monitored. Argentina will see decent rains, especially in northern areas Friday to Sunday before the forecast turns drier into the end of January. Brazil had scattered rains over the past 24 hours, but good coverage is on tap through Sunday, and more scattered rains to follow.
Conab cut their official Brazilian soybean production estimate from 134.45 to 133.7 MMT this today with corn forecast reduced from 102.6 to 102.3 MMT.
On Tuesday, Argentina lifted a 30,000-MT per day cap on corn exports that had been met with criticism and a farmer sales strike. Before that, Argentina had banned corn exports until March 1, an effort it later scrapped. As part of a deal negotiated with farm groups and export companies, the ag ministry said a commission would be named to monitor domestic corn prices. The Argentine government’s return to intervention as a means of taming prices and ensuring supplies likely undermined investor and trade confidence in the market.
Ukraine’s associations of livestock and poultry producers have asked the government to cap corn exports at 22 MMT for 2020-21, according to a report from the analyst APK-Inform. They are concerned about a shortage of animal feed and rising prices. Ukraine’s 2020 corn crop is estimated around 29.3 MMT, an 18% drop from the year prior. So far this season, Ukraine has exported 9.7 MMT of corn, which is 2.6 MMT behind this season last year, according to the country’s economy ministry. Barley exports rose 22% to 5.05 MMT. The state port authority reported this morning that several ports have restricted cargo operations due to poor weather.
Russia is considering the imposition of export taxes of 10 euros ($12) per metric ton for barley and 25 euros ($30) per metric ton for corn, according to two sources familiar with government discussions cited by Reuters. One of the sources indicated the taxes could be put in place for Feb. 1 through March 31, 2021.
CORN: March corn soared after the USDA data and locked up the 25-cent daily limit, curbing trading volume, which was still the highest since the Nov. 10 when USDA released its last crop production report. Those who needed to exit shorts or wanted to get long but could not on Tuesday jumped in overnight, helping futures gap higher and rise to the highest since July 2013. That month prices trading from $8.00 to $4.88 1/4 before closing at $4.99. USDA estimated Dec 1 corn stocks at 11.322 billion bu., 318 million below the trade’s guess and a bullish surprise. Lower than expected US corn stocks were mostly a function of reduced production, which was trimmed 325 million bu. to 14.182 billion bu. Total Sept.-Nov. disappearance was also record large, but USDA also cut its Sept. 1 ending stocks forecast by 76 million bushels. Prices will stay elevated until after the February crop insurance discovery period to encourage big planted acreage around the globe and remain strong until more is known about the weather and size of the world corn crop in 2021.
SOYBEANS: March opened higher and pared gains into the break. Soymeal is trading lower after extending gains overnight to the highest since June 2014. new contract highs. Yesterday’s burst in the soy complex is setting the stage for a possible “buy-the-rumor, sell-the-fact” events. But unless prices close below yesterday’s lows, the trends remain bullish. Today’s action may reveal more about the data longer-term influence. Meanwhile, Malaysian palm oil futures reversed early 1.2% gains on Wednesday, ending at a two-week low on concerns over weak demand as Malaysia kept its February export tax rate at 8%, but losses were limited by higher soyoil prices. The worlds second-largest palm producer has begun a 14-day movement restriction to curb rising COVID-19 cases and is also under a nationwide state of emergency that could last until August. The curbs will also likely result in lower domestic consumption of palm oil this month, which could raise inventories from 13-year lows. China’s Dalian most-active soyoil contract fell 0.1%, while its palm oil contract slipped 0.4%.
WHEAT: Futures pushed higher overnight before paring gains before the break this morning. Follow-through strength to end this week is probably needed to sustain the rally.
Hogs: Steady to weak
Cattle: Futures are trading above last week’s low, but lower from last Friday’s close as the futures market technically corrects. Traders are looking for this week’s negotiated cash cattle price will be steady to weaker than last week. Slaughter margins are the smallest since March and packers will continue to leverage their substantial committed cattle inventory against the cash market. After a lackluster start to the week, Choice boxed beef climbed $1.45 and Select gained $2.35, with movement improving to 172 loads and boosting packer margins USDA in its monthly Supply & Demand Report yesterday trimmed its 2021 beef production forecast by 70 million lbs. and added 10 million bu. to its export outlook, which helped to raise its average steer price projection 50 cents from December to $115.50 per cwt., up nearly $7 from the average cash price in 2020.
Hogs: The pork cutout value slipped 14 cents yesterday, spurring strong sales of 434.05 loads. Cash hog bids edged lower with the national average bid falling 52 cents. Average market hog weights in Iowa/Minnesota rose 1.5 lbs. to 293.1 lbs. last week and up from 288.3 lbs. a year earlier, USDA data showed. The focus now turns to the export markets as rising Covid-19 cases and new lockdowns will slow travel and spending in China into the Lunar New Year holidays next month. After the recent improvement in 2021 U.S. pork export sales, Thursday’s weekly USDA export sales data will be closely watched. USDA’s adjustments to the pork balance sheet were less favorable, with the agency boosting total supplies by 40 million lbs. on a rise in production and cutting its pork export forecast by 175 million lbs., with exports now expected to slide 1.9% from 2020 levels. But USDA raised its average hog price projection for 2021 $2.50 from last month to $49.50 per hundredweight, which would be a $6.32 from 2020.
Corn: Up 1 to 3 cents
Soybeans: Up 5 to 10 cents
Wheat: Up 9 to 12 cents
GENERAL COMMENTS: Corn and soybeans are firm and holding just below recent swing highs ahead of key USDA reports at 11:00 a.m. CT. Wheat is rising as Russia is “considering” raising wheat export tariffs from the current 25 euros ($30) per MT to 50 euros per MT, from February 15 through June 30.
There are going to be a lot of numbers on this report as we get the final yield and production as well as Dec 1 stocks, but the most important figures are going to be U.S. and world carryouts with traders looking for further cuts from USDA. Keep in mind this has been a demand-led rally which has been led by overseas buying with U.S. corn exports already forecasted to increase from 1.778 billion bu. to 2.650 billion bu. and soybeans moving from 1.676 billion to 2.200 billion bushels. U.S. ending carryout is estimated at 1.600 billion, compared with 1.702 in the Dec report. Soybeans carryover seen falling to 139 million bu. from 175 million in December.
The weather forecasts in South America are becoming less threatening which is helping to stabilize yield ideas but follow up rains are critical. Much-needed rainfall was noted in southern and portions of central Argentina over the weekend. The rain helped bolster soil moisture in areas that were previously lacking moisture. Coarse grain and oilseed development conditions will improve for a while. However, there are still moisture shortages at the subsoil level and additional rain will be needed especially as drier and warmer biased conditions evolve again this weekend for a minimum of one week. Brazil saw some rains fall far north and south over the past 24 hours but will see better overall coverage across the bulk of the growing region next ten days.
Soybeans are about $5.00 (57%) above the Aug. 12 reversal up low in a three-wave and extended rally. Daily momentum is overbought with several failing to make new highs to confirm the latest move to 6 1/2-year highs. Soybeans are in a position to produced “buy-the-rumor, sell-the-fact” response to USDA data later this morning. It also could take the remainder of the week or early next week to confirm that action. Corn is up about $1.60 (48%) above the Aug. 12 reversal up low. A break back below $4.82 1/2 would likely set in motion long liquidation and new selling as funds take profits on net-long positions that have risen from a net-short of 300,000 contracts to nearly 350,000 net-longs, the most since May 2011, more than the during the drought of 2012. The record was 429,000 net longs in October 2010. Commercials are net short a record 761,000 futures and options. You’ve heard the bullish rhetoric throughout the holidays, so don’t turn more bullish now.
Before the reopening this morning, USDA announced new soybean sales. Private exporters sold 120,000 MT of soybeans to unknown destinations for delivery this season. That follows 132,000 MT of soybeans announced sold to China yesterday and Friday’s announcements of 204,000 MT of soybeans to China.
China’s ag ministry hiked its 2020-21 corn import projection by 3 MMT from December to 10 MMT, citing the “enlarging” price difference between domestic and international corn. Chinese corn prices hit new records this week. The ministry also lowered its 2020-21 corn production forecast from 264.71 MMT to 260.67 MMT, a move many have said is long overdue. The country’s expected corn deficit widened more than 2 MMT to 18.51 MMT. USDA in December pegged China’s corn crop at 260 MMT and imports at 16.5 MMT. The ag ministry also raised its soybean import projection from 95.1 MMT to 98.1 MMT, citing rising demand from its livestock sector for soymeal. USDA pegs Chinese imports at 100.0 MMT. Also of note, China’s cotton import projection edged 100,000 MT higher to 2.1 MMT.
Global stock markets stabilized after Monday’s losses, with investors feeling confident enough in the economic recovery and vaccine rollout to buy the dip in some risk assets. U.S. equity futures were slightly higher, while Europe’s Stoxx 600 Index traded little changed. Commodity prices rose as the dollar held steady and benchmark Treasury yields ticked higher. After Bitcoin suffered steep declines on Monday, the largest cryptocurrency bounced back above $35,000. The mood across markets is positive and investors are continuing to assess how the rise in Treasury yields changes the financial landscape. While progress on a vaccine gives reason to be hopeful, there are lingering concerns over the speculative excess and froth that’s driven stock markets to all-time highs in the middle of a pandemic.
CORN: March corn opened slightly lower last night, touching $4.89 ¼ before rebounding into the morning break to post small gains. Marketing year corn export shipments improved in recent weeks. Shipments to date still fall short of the seasonal pace needed to hit USDAs target, but the deficit has started to narrow over the past several weeks. As such, USDA won’t make any changed in its export forecast today.
SOYBEANS: March opened lower and erased losses to trading slightly higher into the break and well contained inside of yesterday’s range. Some of the recent sales have been optional origin, which means that they could still be flipped to Brazil, but the opposite is possible as well. It all depends on the early harvest pace and movement of soybeans to the ports. That puts a big focus on what USDA does with its export estimate later today. Malaysian palm oil futures ended 2.5% lower on Tuesday, hitting a one-week low on concerns of weak demand as partial data showed a sharp decline in January exports. Exports of Malaysian palm oil products for Jan. 1-10 fell 29.7% from the same period in December. Dalians most-active soyoil contract and its palm oil contract slumped 1.7%. U.S. soyoil futures followed lower overnight.
WHEAT: Futures started higher on news that Russia is considering raising tariffs. Prices are trading inside of yesterday’s reversal down range and a close above $6.51 ½ would be positive after the USDA update on winter wheat planted acreage later this morning. Traders are looking for plantings to rise about 1.1 million acres to 31.528 million from the 111-year low last year. It would be the first increase in eight years. Egypt passed on its tender for wheat overnight after receiving only four offers. The lowest offer in the international tender from Egypts state commodities buyer GASC to buy wheat on Tuesday was believed to be $292.97 per MT FOB for wheat from Romania, up from $283.33 in its last tender Dec. 15 The unusually low number of four trading houses taking part in the tender was largely linked to reports of higher wheat export taxes in Russia. Snow and rain are still expected in much of western Russia, Ukraine and areas in both Russia’s Southern Region and far northwestern Kazakhstan. The precipitation will add moisture to the soil for use in the spring – at least when the snow melts.
Hogs: Steady to mixed
Cattle: Cash cattle traded at an average price of $111.27 last week, a 24-cent dip from the week prior and a bit of a disappointment after expectations for steady to higher action. But this week’s kill is off to a solid start. The product market was mixed on Monday, with Choice rising 89 cents and Select dropping 95 cents and a subdued 123 loads changing hands. Traders will look to today’s USDA balance sheet to see if USDA raises its 6% growth forecast for exports in 2021.
Hogs: Packers aren’t tapping the brakes on production after slaughtering a record number of hogs last week. Monday’s kill totaled 498,000 head, a 2,000-head jump from year-ago and an 8,000-head gain from week-ago. That keeps attention on whether demand is there to meet the record-setting pork production. On Monday, 377.17 loads of pork changed hands on a $2.38 gain in the cutout value. Exports have also been a bright spot, with USDA data showing U.S. pork exports have already registered annual records in terms of both volume and value, with one month yet to be reported for 2020. And the U.S. Meat Export Federation noted an uptick in demand from countries outside of China. However, Taiwanese consumers are turning away from imported pork, driving up prices and frustrating meat producers’ hopes that the liberalization of the country’s pork market would offer new opportunities for U.S. suppliers, the Financial Times reports. On Jan. 1, Taiwan lifted a ban on U.S. pork containing the feed additive ractopamine.
Corn: Steady to up 2 cents
Soybeans: Up 5 to 9 cents
Wheat: Up 4 to 7 cents
GENERAL COMMENTS: Corn and soybean markets are higher this morning ahead of USDA reports on U.S. and South American production, supply and demand and Dec. 1 inventories Tuesday that traders expect will show tightening inventories. March soybeans rose to new 6 ½-year high overnight and March corn climbed above $5.00 but did not test the high at $5.02 3/4. Wheat is moving higher with the recent strength in corn and soybeans and Russian wheat prices.
Before the reopening this morning, USDA announced daily corn and soybean sales. Private exporters sold132,000 MT of soybeans to China for old-crop delivery. That follows Friday’s announcement of 204,000 MT of soybeans to China. USDA also reported 108,500 MT of corn sold to Colombia for old-crop delivery this morning. The sales will add support to the corn and soybean markets after the reopening.
Today, China indicated it was readying to approve another genetically modified (GMO) corn variety as well as a GMO soybean that are both produced by Beijing Dabeinong Technology Group Co Ltd. Last year, China approved three domestically designed GMO crops, its first such approvals in a decade. China does not permit the planting of GMO soybeans or corn, but it does allow the import of such products for use in animal feed. But the government is pushing the use of biotech breeding to boost food security, with the industry expecting progress toward commercialization in the coming year. The latest approvals are notable as China’s corn imports have jumped to a record because the domestic hog population is rebounding faster than expected from African swine fever. That’s jolted the government into action, including resuming state corn sales and pledging to expand domestic crop production.
Friday afternoon’s CFTC Report showed fund buying was substantially less than expected, and in the case of beans and meal, showed up as selling instead of the expected buying. Of course, this is the eighth straight report of this phenomenon. This is all going to come down to how traders and funds want to pre-position going into the USDA reports on Tuesday. Managed money funds added about 18,000k net corn and 11,900 net Chicago wheat on the week ended Jan. 5, both much less than expected by daily trade estimates. Funds cut longs by slightly more than 20,000 contracts instead of increasing them by 40,000. Producers and merchants covered a net 46,600 short positions in corn and 13,600 shorts in SRW wheat futures, and increased soybean shorts by almost 22,300 contracts. Still, the dichotomy between commercial shorts and fund longs remains near historical record increasing the importance of how prices react to USDA data tomorrow.
The dollar gained broadly on Monday as widening U.S. Treasury yields and expectations of more fiscal stimulus lifted the greenback against its rivals, with the euro falling to a two-week low. President-elect Joe Biden, who takes office on Jan. 20 with Democrats able to control both houses of Congress, has promised "trillions" in extra pandemic-relief spending. Ordinarily, the extra spending plans would force investors to worry about rising inflation and its detrimental impact on the U.S. dollar in a weak economy, but the currency has been supported in recent weeks thanks to rising U.S. yields. Measured in inflation-adjusted terms, U.S. 10-year real Treasury yields are rising faster other nations. The nominal yield on benchmark 10-year U.S. note is up more than 20 basis points to 1.1187%
World shares came off record highs on Monday as caution over rising coronavirus cases saw some profit-taking from investors. Worldwide coronavirus cases surpassed 90 million on Monday, according to a Reuters tally. Last week, Wall Street bankers warned of toppy stock markets and a looming retreat after exuberance from unprecedented economic stimulus had led to "frothy" asset prices.
Weather is mixed this morning. Concerns are rising about dryness in Argentina especially in the southwest where rainfall is expected to be lightest and least frequent. The entire nation will dry down next week making this week’s rain extremely important. Not much of this dry region received rain during the weekend, but rain today and Monday will offer some temporary relief with a better distribution of rain in portions of this region Friday into Saturday. Whatever area does not get adequate relief from dryness will be faced with more serious stress next week. It will be imperative that dry weather from Saturday of this week through Jan. 22 is followed by substantial rain. Without it, crop stress will likely start robbing the nation’s crops of yield once again. However, Brazil’s weather outlook looks very good for the coming ten days with all crop areas in the nation getting rain at one time or another. Some of the model forecasts are too great with rainfall in the interior southern parts of the nation. Crop development should advance favorably even though there will be some pockets of moisture stress for a little while early this week.
Meanwhile, after talks with farm groups and the ag ministry, Argentina announced it would suspend its temporary ban on corn exports and instead cap shipments at 30,000 MT a day. The agreement guarantees the domestic supply of corn and cushions local prices against fluctuations in international markets, according to the ag ministry. Farmers had planned on launching a 72-hour strike today over the now lifted corn export ban through March 1.
Mainland China saw its biggest daily increase in COVID-19 cases in over five months, the countrys health authority said on Monday, as new infections in Hebei province surrounding Beijing continued to rise. The surge comes as the World Health Organizations team of investigators probing the origins of the COVID-19 pandemic are set to arrive in China on Thursday.
Chinese equity markets fell the most in three weeks, led by consumer shares and commodity producers, amid concern valuations for the most popular stocks were stretched and as metal prices slumped. Jitters are appearing in China’s $11 trillion equity market after the gauge surpassed its bubble peak in 2015. While overall valuations are lower than back then, the gauge of consumer staples now trades at a heady 11 times price to book.
The outgoing U.S. Trade Representative told the Wall Street Journal that tariffs get results. His advice to the Biden administration: stay the course. “We changed the way people think about China,” Lighthizer told the WSJ. “We want a China policy that thinks about the geopolitical competition between the United States and an adversary — an economic adversary.” Lighthizer views the Biden trade policy plan with alarm, saying it could let other nations slow or veto U.S. actions and tie up the U.S. in endless, pointless discussions with China.
CORN: March corn opened steady and then traded both sides of unchanged in directionless dealings but underlying demand on market breaks. Key resistance remains the $5.02 3/4 high, then $5.19. Mexican officials and producers will meet this week to decide whether their GMO corn ban, issued on December 31, will apply to imported feed corn. The country is trying to phase out corn imports to achieve food production self-sufficiency but is the largest importer of U.S. corn.
SOYBEANS: March opened opened higher and hit new highs overnight before trading slowed into the market break. Malaysian palm oil futures ended 0.9% lower on Monday after rising 6% last week. Prices fell on data from the Malaysian Palm Oil Board showed the worlds second-biggest producer imported record levels of the oil in December while exports in first 10 days of January have plunged 35%from a month earlier. The Board also reported that Malaysias December palm oil end-stocks slumped 19% in December from the prior month to hit 13-year lows, while production fell 10.6%. Soyoil on China’s Dalian Exchange fell 0.9% while its palm oil contract was down 1.6%.
WHEAT: Futures started lower overnight before rebounding. The wheat market cannot afford to allow wheat to become a feed grain,” says industry analyst Richard Crow. He notes “the EUY is already feeding wheat and in time that will limit some wheat exports. The next round of North Africa business for wheat will be interesting.” The strengthening dollar helped to push price lower before rising Russian wheat prices lifted SRW and HRW futures higher this morning. The Federal Center of Quality & Safety Assurance for Grain and Grain Products estimated Russian exports at 26.9 MMT, with exports totalling 1.8Mt in the past two weeks and 21% ahead of last year’s pace. This coincides with rising export prices in Russia ahead of the implementation of the export tax next month, with prices up about 20% from a year ago, which suggests the market continues to price in the heightened prices in Russia due to the tax, with further support added from the soybean and corn complexes. China sold 2.1 MMT of wheat or 52.2% of the total offered in its most recent auction of its state reserves. Soaring corn prices are being attributed to increasing purchases of wheat from state reserves following a decline in the past few weeks.
Hogs: Steady to mixed
Cattle: Cash cattle trade ranged from $110 to $112 last week, in line with price action the week prior but several bucks under February live cattle futures. Cattle futures stabilized last week after some big technical-driven price swings early in the week, with traders encouraged by aggressive retailer buying of beef and strong packer profit margins. Cattle futures are pausing and bulls need to take control this week to sustain last week’s rebound. Traders in the feeder cattle market will keep an eye on the feed market, but stable live cattle prices should keep a floor under the market.
Hogs: Hog slaughter and pork production hit records last week, with processors ramping 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. Followthrough 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. On their second day of trade, China’s new live hog futures contract tumbled their daily limit (8%) to 26,030 yuan (4,019.95) per metric ton. This came after a 13% dive on its trade debut. Analysts note that Chinese live hog prices are elevated, and the market is hedging on the short side in anticipation of a sharp drop in pork prices this year as China’s hog herd grows.
Corn: Up 1 to 3 cents
Soybeans: Up 10 to 15 cents
Wheat: Steady down 4 cents
GENERAL COMMENTS: The grain and soybean markets have been choppy this week, consolidating sharp December gains ahead of key USDA reports Jan. 12 on U.S. production, Dec. 1 inventories, global carryovers and the agency first estimate of winter wheat seedings. Futures started on the defensive overnight but quickly reverse and are near this week’s 6 1/2-year highs in corn and soybeans. Wheat pared its losses but remains about 20 cents below the 6-year highs hit on Jan. 5. Traders were waiting for activity in Russia to resume following holidays this week to gauge the impact of measures to curb the countrys exports.
Before the reopening this morning, USDA announced private exporters sold 204,000 MT of soybeans to China for delivery this marketing year. The sales will add to soybean strength this morning.
Weather leans negative but that has not slowed fund buying interest ahead of the USDA reports. The speculative flow of funds into all assets may be most observable in cryptocurrencies, which are heading for their biggest weekly surge since the last bubble in Bitcoin peaked about three years ago, ahead of a spectacular crash.
Notable rain is expected for Argentina Sunday through Tuesday, with west-central and northern Argentina in line for the greatest accumulation, according to World Weather Inc. Weather models differ as to likely precipitation amounts for east-central areas of the country, but the region should see some showers. The weather watchers said conditions will remain generally favorable for crop areas of Brazil, thought there are some dry pockets, such as from Rio Grande do Sul to Parana and in far northeast areas.
The Buenos Aires Grains Exchange increased its estimate for 2020-21 wheat exports by 200,000 MT to 17.0 MMT. It also said soybean planting is 93.5% completed and corn is 85.3% sown. The exchange has stated that the heart of the Pampas crop belt, one of Argentina’s most fertile agricultural areas, has experienced more severe dryness than other regions. The dryness is feared to reduce soybean and corn areas with rains further south arriving too late. The Argentinian Grain Exporters Union has ended a month-long wage strike following an agreement with export companies that will allow exports of corn, soy and wheat to resume. Meanwhile, the country’s corn producers met with the Argentine Ag Minister yesterday to review the decision to temporarily suspend corn exports but there was no resolution announced.
Welcome moisture headed for dry areas of the Black Sea region. Rain and snow are expected for the Black Sea region over the next week, including in Russia’s Southern Region and northwest Kazakhstan, reports World Weather. It reports some of the precipitation in Russia’s Southern Region could be significant.
It has been a worrisome start to the new year for a thawing of relations between the U.S. and China. Hong Kong looks set to become an even more contentious issue. Police there on Wednesday undertook their furthest-reaching action yet against the city’s political opposition, arresting more than 50 activists under the auspices of its national security law. The arrests prompted Antony Blinken, President-elect Joe Biden’s nominee for secretary of state, to say on Twitter that the incoming U.S. administration would “stand with the people of Hong Kong and against Beijing’s crackdown on democracy.”
Meanwhile, the World Health Organization’s investigation into the origins of Covid-19 was another issue that appeared to boil over this week. Director-General Tedros Adhanom Ghebreyesus issued a rare rebuke of China on Tuesday after Beijing failed to finalize approvals for a WHO team to travel to the country, delaying the mission even after months of back and forth.
And, the New York Stock Exchange said it would delist China’s three state-owned telecom carriers after earlier saying it would not. It was ultimately decided that China Mobile, China Telecom and China Unicom will be delisted, but not before Beijing characterized the saga as an example of how “arbitrary, reckless and unpredictable” American rules and institutions can be.
The first fallout from rising U.S. Treasury yields has emerged, with a stronger dollar pushing emerging markets currencies lower this week. The 10-year Treasury note rose above 1.1% for the first time since March, raising the prospect of a pause in the dollar’s recent slide, which could undermine the rally in risk assets. Developing economies that are reliant on external financing may find their currencies especially vulnerable to any sustained strength in the greenback.
CORN: March corn opened slightly lower last night and quickly uncovered new buying interest to rise to $4.99 1/2. Key resistance remains at $5.02 3/4 from Jan. 6. Support is at $4.87 1/4, then $4.79 1/2.
SOYBEANS: March opened lower and touched $13.48 1/2 before quickly rebounding to $13.75, just below the Jan. 6 high at $13.78 1/4. Malaysian palm oil futures inched higher on Friday to post a 6% weekly gain, underpinned by tighter supply outlooks ahead of data from Malaysian Palm Oil Board on Monday and USDA world supply and demand estimates on Tuesday. Malaysia will delay the nationwide rollout of its B20 palm oil biodiesel mandate to early 2022, state news agency Bernama reported, following in Indonesias footsteps to delay its B40 mandate. China’s Dalian most-active soyoil contract fell 0.02%, while its palm oil contract declined0.5%.
WHEAT: Futures are struggling to following corn and soybeans higher with prices ending the overnight session closer to session lows than the highs. Japan bought 120,000 MT of milling wheat in their regular weekly tender, including 27,000 from the U.S., 44,000 from Canada, and 48,000 from Australia. USDA will also release its first winter wheat acreage estimate next Tuesday. The average trade forecast calls for plantings to rise 31.528 million acres, up from 30.415 million last season.
Cattle: Steady to slightly firmer
Hogs: Steady to slightly firmer
Cattle: Modest gains Thursday put momentum back on bulls’ side after wide-swinging price changes to start the week. Boxed beef values climbed about 50 cents on Thursday on a third day of strong wholesale trading. Stabilization of futures, strong packing margins and aggressive retailer buying helped cash action to pick up mostly around the $112 mark yesterday, in line with the upper end of last week’s cash action. USDA reported steer carcass weights dropped 7 lbs. to 913 lbs. during the Christmas week from a week earlier. However, it is only 1 lb. above a year ago, signaling the heavy carcass problem is normalizing.
Hogs: Futures gapped lower at Thursday’s open, but the weaker start uncovered good demand that lifted most contracts higher into the end of the day. The exception was February, which was under pressure from the rich premium to the cash index. A $2.17 jump in the pork cutout value on continued strong sales turned the market back to the upside. Slaughter hog weights peaked in the first week of December at a record 218 lbs. Weights are now 3 lbs. lower but still 3 lbs. above the prior five-year average. Chinese live hog futures tumbled 12.6% on their debut on the Dalian Commodity Exchange today. Analysts said the contract’s high listing price and expectations for supplies to build weighed on futures. The contract is China’s first live-animal physical delivery contract.