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 world's 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.