After the Bell: Corn, Soy Firm Ahead of USDA Reports, Capping Weekly Rallies to 6 1/2-Year Peaks

Posted on Fri, 01/08/2021 - 14:37

Corn: Old-crop corn futures finished 1 1/4 to 2 1/4 cents higher today. New-crop December futures slipped 1/2 cent on the day. For the week, March corn futures firmed 12 1/4 cents and settled at $4.96 1/4 after pushing above $5.00 earlier in the week – the first time front-month futures traded above that level since May 2014.  The rally in futures continued this week and funds expanded their massive net position. Speculative money flow will remain a key component to price action next week, but USDA’s Jan. 12 reports and South American weather will also play a key role. Traders expect USDA to lower its 2020 U.S. corn crop estimate, along with the projections for U.S. and global ending stocks. Dec. 1 corn stocks are expected to come in well above year-ago, but overall, traders anticipate the report data will be bullish. With much of that already factored into prices, however, the data may have to be even more bullish than expected to get a strong upside price reaction. If the data is neutral or bearish compared with pre-report expectations, it could trigger a corrective pullback.  

Soybeans:  March beans gained 19 1/2 cents to close at $13.74 3/4, capping a 63 3/4-cent weekly gain, while November beans rose 50 cents this week to $11.61 3/4. March meal extended this week’s gain to $10.20, at $439.60 and March soyoil rose 1.19 cents to 43.59 cents. Nearby futures rallied to a new 6 1/2-year high Friday but settled off the day’s best levels ahead of the weekend. The market remains supported by expectations for smaller U.S. and world production and carryovers from USDA on Jan. 12. U.S. ending stocks are expected to fall to 139 million bu. next week, down from 175 million in December and the smallest in seven years when they ended at 92 million. World ending stocks are expected to fall to the lowest in five seasons. Traders are also looking for U.S. Dec. 1 stocks to fall to 2.92 billion bu., down from 3.252 billion bu. a year ago. The trade has anticipated very bullish data next week and how the market reacts to the data will be just as important as the numbers, themselves. Momentum studies are at overbought levels after reaching overhead resistance levels at $13.90 today.  

Wheat: SRW futures fell 3 ½ cents to close at $6.38 3/4 and down 1 3/4 cents this week. March HRW futures fell 5 3/4 cents to $5.94 3/4 and down 8 3/4 cents this week. March spring wheat rose 8 3/4 cents this week to $6.07 ¾ on unwinding of spreads versus the winter wheat futures. Wheat started higher overnight with corn and beans and turned lower, forming a bearish outside day reversal down pattern. The market is looking for USDA on Jan. 12 to estimate winter wheat planted acreage to rise about 1.1 million acres to 31.5 million acres, the first increase in eight years. The fear in the market today is that number may prove larger as high crop insurance prices and adequate moisture for emergence last fall. Welcome moisture is headed for dry areas of the Black Sea region. World Weather said some of the precipitation in Russia’s Southern Region could be significant. However, the U.S. Plains looks dry the next few weeks. After another week of disappointing weekly export sales data this week, the focus remains on new business.

Cotton: March cotton futures ended the day up 1 point at 79.77 cents but on the week posted an impressive gain of 165 points. The late-week pause after good early-week gains suggests some buying momentum will once again enter the cotton futures market early next week. The December Employment report out Friday morning show a larger decline of 140,000 in non-farm jobs, confirming a slipping U.S. economy after the summertime rebound. Cotton futures traders took some money out of the long side of the market late this week as they prepare for next Tuesday’s USDA reports. Traders are looking for U.S. ending stocks to decline about 300,000 bales from last month’s estimate on additional cuts to the crop production.

Hogs: Lean hog futures got off to a higher start, but buying was short lived. Futures settled 10 to 50 cents lower through the July contract with far deferred months registering slight gains. April lean hogs settled 57 ½ cents higher for the week. Hog slaughter and pork production hit records this week, with slaughter ramping up after two consecutive weeks of holiday-clipped kills and the resumption of processing at a Columbus Junction, Iowa pork plant after a three-week closure. That helped cash prices firm late this week and traders will be watching to see if that trend continues, confirming a seasonal low. Daily pork load counts will also be watched to ensure high production is met by strong demand.

Cattle: February live cattle futures closed the day down $0.50 at $114.475. April live cattle futures were down $0.20 at $119.30 and for the week gained a nickel. March feeder cattle futures finished Friday down $0.75 $136.825 and for the week lost $3.40.  After strong early-week losses the live cattle futures market made a comeback to erase all but a nickel of those declines. Stabilization of futures, strong packing margins and aggressive retailer buying helped cash cattle trade to pick up mostly around the $112 mark on Thursday, in line with the upper end of last week’s cash action. Such suggests steady to higher live cattle futures price action next week. Feeder futures may continue to struggle next week, but a stable to firm live cattle futures market will put a floor under feeder futures.