Corn: Up 2 to 5 cents
Soybeans: Up 11 to 21 cents
Wheat: Down 2 to 5 cents
GENERAL COMMENTS: Soybeans were the upside leader during a strong overnight volume session, with March and May futures both rallying back past the $14 per bushel mark as supplies remain delayed from South America, and the U.S. supplies quickly running low heading into the summer months. Actual fieldwork progress in Brazil on soybean and first-crop corn harvesting and second-crop corn planting remains slow with some anecdotal reports even less optimistic. The new-crop soybean and corn futures both moved to fresh contract highs overnight, each unwilling to give up any prospective acres heading into the spring planting season. Wheat futures slid on Tuesday, giving up some of yesterday’s strong gains although the market is trading near its highest since late January on concerns over cold weather damage to the U.S. crop. Broad gains in vegetable oils and crude oil also supported soybeans. Soyoil scored new highs and soymeal tested key support yesterday and rebounded overnight. The wider commodities complex posted strong gains yesterday, pushing the Bloomberg Commodity Index to its highest level since March 2013 and attracting new flows of investment money into grains overnight.
Before the reopening, USDA did not announce any large grain or soybean sales this morning. That may lead to increased bullish caution this morning.
Warmer weather helped alleviate ice issues on Midwest rivers, key arteries for shipping grain to export terminals at the U.S. Gulf. Brokers resumed posting bids and offers for barge freight on the Illinois River the Mississippi River at St. Louis. Basis bids for corn shipped by barge to U.S. Gulf Coast export terminals were steady to higher on Monday, with spot values lifted by tightening nearby supplies as icy river conditions delayed some shipments, traders said. Tight supplies of empty barges underpinned freight rates in the Midwest. Strong exporter demand for corn also kept nearby basis values well supported. USDA yesterday reported 1.23 MMT of corn were inspected for export last week, near the high end of trade expectations and slightly below the weekly pace needed to reach the agency’s annual forecast. Soybean export inspections last week totaled 721,845 MT, the lowest since mid-August as global importers shift to South American supplies, which are now delayed. Brazil's soybean crop is 15% harvested as of Feb. 18, compared with 31% at the same point last year, consultancy AgRural said. The harvesting delays, caused by rain, have delayed export shipments.
Argentina was dry over the past 24 hours and will remain so up through the weekend, save for some rains in the very far north. Next week’s maps are split into a wet west and dry east pattern, with warming temps stressing crops in the bulk of the country as well. Showers on Argentina's Pampas grains belt in recent weeks have helped make up for the dryness that parched soy and corn crops from the middle of last year. Farmers are now hoping for enough rain to boost yields after the country's two main cash crops were hit by an unusual lack of precipitation before a resurgence of wet weather in January. Brazil was almost entirely dry yesterday as well except for some scattered rains far south and far northeast. Rain chances look solid over the next ten days, save for the far south. That will keep soybean and first -crop corn harvest slow and second-crop corn planting delayed as well.
The stock market’s highest flyers remain under pressure this morning. Futures for the tech-heavy Nasdaq 100 dropped 1.7%, after the index slumped 2.6% in trading yesterday on a selloff in some of the hottest pandemic stocks. Tesla Inc. shares are set to tumble again at the open with futures trading well south of $700. CEO Elon Musk's bet on Bitcoin also took a hit with the cryptocurrency dropping significantly again this morning. Positioning for a global economic recovery remains the dominant market theme, with developed-market bond yields rising again. U.S. Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, meanwhile, are staying wary of signs of froth in the market as they push ahead with stimulus measures which will elevate the euphoria. Elsewhere, White House chief economic adviser Brian Deese said the key focus for the administration is the job market. The U.S. also marked the grim milestone of 500,000 Covid-19 deaths, though vaccine makers are set to indicate that some of the bottlenecks in supply which hit the immunization rollout should ease soon.
CORN: May corn futures touched $5.57 ½ overnight but still below the contract high at $5.72. Some underlying support continued from news the U.S. Environmental Protection Agency said on Monday it agrees with an appeals court's decision last year that cast doubt on a program that granted oil refiners exemptions to U.S. biofuel blending laws. The announcement signals that the agency could dramatically limit the number of exemptions given to refiners under the program going forward.
SOYBEANS: May soybeans touched $14.15 overnight, the highest since Jan. 19 and just below the Jan. 14 contract high at $14.33.
WHEAT: USDA released selective state crop ratings Monday afternoon and they showed declines across both HRW and SRW states. USDA reports showed a small decline in the condition of crops Kansas, where the proportion of wheat in good to excellent condition fell from 43% in January to 40% as of Sunday. Conditions also declined in Kentucky, North Carolina, North Dakota, Oklahoma and Illinois. A weaker dollar also contributed to the wider strength within the commodities yesterday, but dollar strength today has limited new buying interest. With respect to the European Union, the MARS bulletin published yesterday suggests that the recent cold snaps across Europe had minimal detrimental impacts on winter crops with most areas at risk of cold damage having decent snow cover. Cold temperatures across the Black Sea producing regions are an area of focus right now, with heightened risk of winterkill.
Cattle: Cash cattle traded at an average price of $114.07 last week, up 24 cents from the week prior, continuing the gradual improvement in cash prices. Average bids yesterday were reported at $114.00. February live cattle hold a modest premium to these prices, while April live cattle are nearly $9 above the cash market. Those premiums along with Friday’s Cattle on Feed Report also weighing on the market. But the market should be able to shift focus back to the product market and likely cash prospects quickly. Boxed beef prices edged 75 cents (Choice) to $2.08 (Select) higher on Monday amid light movement of 89 loads. Today, USDA will update its monthly Cold Storage Report. On average over the past five years, frozen beef stocks averaged an increase of 5.6 million lbs. from the end of December to the close of January.
Hogs: Nearby lean hogs have moved sideways in recent days, but the path of least resistance remains to the upside and futures settled high range with modest gains on Monday. Deferred months pushed to new contract highs. This afternoon’s cold storage update will provide another read on both domestic and export demand, both of which have been positive stories despite the pandemic. The five-year average is for a 64.3 million lb. jump in frozen pork stocks between Dec. 31 and Jan. 31. Chinese live hog prices fell yesterday as farmers rush to liquidate stocks, pushing the hog/corn price ratio fell below 10 for the first time since August 2019. The hog market remains volatile as cash prices fall sharply but deferred futures for September rally sharply, a possible sign of worries about a new variant of African swine fever curbing herd rebuilding efforts. China will sell 20,000 MT of frozen pork from state reserves on Feb. 26 after selling 170,000 MT in six prior sales from cold storage in the run-up to the Lunar New Year holiday earlier this month when meat consumption typically peaks in the country.