- Soybeans pulled themselves up into a strong trade
- Ethanol margins remain poor
- South American forecast
- Can the hogs continue the positive trade this week?
- Snow could have more of an impact of the market’s tomorrow
The last week of January is starting and the Sunday overnight trade has been a mixed bag with most markets dipping lower and trying to return higher in the early morning hours.
Equities will try to spark more rally as the Biden Administration should take more steps to get another round of fiscal stimulus into the economy. Economic data is light with no scheduled reports on the week. The 4th quarter GDP estimate will be out on Thursday. The 3rd quarter estimate showed how resilient the US economy with a growth estimate of 33.4%. The surge was most contributed by fewer covid restrictions in the summer. The 4th quarter US GDP estimate is 4.6%. Still a significant growth given the challenges the economy has seen.
Grains are still contending with last week’s sell off or liquidation. It has some wondering if the highs are in for the first part of 2021. A seasoned trader stated, nobody rings a bell in Chicago when the high is hit. There is no definitive way to know whether the high is behind us or still ahead of us.
Starting the week grains saw a selloff in the overnight trade with plenty of sell orders still sitting ready from the Friday close. The selling though was exhausted and grains were able to come closer to unchanged by the morning pause. World Weather Inc. predicts, a good mix of rain and sunshine over the next two weeks for central and northern areas of Argentina. Southern areas of Argentina will miss out on rain, World Weather Inc expects many areas should get at least enough precipitation to slow the drying trend. No broad-based problem with moisture shortages are presently anticipated in key crop areas, but a few areas in southwestern Buenos Aires and southern La Pampa will be a little too dry. Conditions are also generally favorable for crops in Brazil, with the driest areas outside of primary corn and soybean producing areas.
There is little data at the beginning of the week for the start of South American harvest. The latest news last week was that harvest was off to a slow start, but was getting underway.
Argentina is still contending with a trucker strike that started almost immediately after it was able to settle the oilseed worker strike. Stone X’s Argentina team reported that there was just 10% of normal truck traffic into Argentina ports last week. That does not help get the crop to the ports and may keep China taking delivery of US soybeans. USDA did not announce any flash sales Monday morning.
As for the Black Sea. Ukraine’s Economy Ministry upped their corn estimates for 2020/21 from 29.3 MMT to 30.3 MMT and corn exports from 22.3 MMT to 23.5 MMT.
Livestock look to open the week with volatility. The cattle on feed report last week showed higher placements than the average analyst estimate. That could take some initial negativity to the market, but overall the report was neutral to expected. There is also winter weather in much of the Midwest that may slow livestock movement and typically is supportive of futures.
You can check out the cattle on feed report here:
There was a lot of social media chatter over the weekend from meat whole sellers that supplies continue to tighten and that cattle may be finally coming current from the two major disruptions in 2019 and 2020. With covid practices in place slaughter rates have been about 98% of what they were a year ago.
Cash cattle started to trade in Kansas and Texas Wednesday after the Fed cattle exchange with live cattle trading at $110. Dressed trade followed suite in the North on Thursday ranging $169-$173. Both live and dressed prices continue to be about steady to $1 lower than last week. There was just light clean up trade on Friday. The majority of cash trade took place on Wednesday and Thursday.
For the week ending January 16, 2021, Imported Beef Passed for Entry in the U.S. totaled 37,856, 110.43% of the previous week and 124.93% of the 4-week average.
Expected Slaughter numbers Monday
118,000 hd today Holiday hd wk ago 122,451 hd yr ago
497,000 hd today Holiday ago 498,769 hd yr ago
Midday Carcass Value Monday
Choice up 2.96 225.78
Select up 2.03 215.37
C/S Spread 10.41
Carcass dn 0.37 82.46
Bellies dn 9.04 123.51
- Corn up 4 1/2 -11 1/4
- Soybeans up 18 1/4 – 31 3/4
- Chicago up 9 – 14
- Kansas City up 11 3/4 – 14
- Livestock Settlements
- Live Cattle dn 0.20 up 0.42
- Feeder Cattle dn 0.70 up 1.87
- Lean Hogs up 0.47 – 0.70
- Class III Milk dn 0.43 -0.48
Pre-Opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, saw a choppy overnight trade. Grains will try to recover from last Friday’s selloff.
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Livestock may see a volatile day of trade with cattle on feed data and winter weather in the Midwest.
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Grains are making a productive turn around on positive export inspections.
John Payne, Daniel’s Ag Marketing, takes a closer look at today’s grain close. Grains sell off sharply, but Payne see’s opportunity ahead. No John Payne 1-25
Jack Fenske, York Commodities, looks at the closing market numbers. Fenske expects grains to now trade in their established ranges.
The first overnight trading session of 2021 was on fire for the grains. Unfortunately the day trade brought a cooling to the market with grains ending the day mixed. Sue Martin with Ag and Investment joined the Fontanelle Final Bell on Monday to highlight some of the reasons why there may have been pull back after the strong overnight session. At the top of the list it may have simply been profit it taking with overnight traders running the corn market to nearly $5 and soybean market to $13.50.
Martin is also closely watching the weather and labor situations in South America. Temps in Argentina and Brazil continue to be hot and dry, but some area’s have seen mixed precipitation. As for the labor side the port strike may not actually be over in Argentina. Martin will be watching the loading of ready ships to see if that offers any idea of where labor stands in Argentine ports.
You can catch the full episode here:
The newest grain export sales report from the USDA for the week ending on December 24 shows that 2020 is ending on a positive note.
Soybean export sales for the 2020-2021 crop surpassed analyst expectations. The trade was looking for sales ranging between 7–25 million bushels. However, the new figure passed those estimates as sales jumped 74 percent from the previous week to 33.7 million bushels. Export sales cancellations also rose 23 percent to 7.9 million bushels. However, a Farm Futures article says that’s not surprising because a recent run-up in the price of soybeans likely caused some price resistance among smaller buyers.
Weekly export sales for 2020-2021 corn also surpassed market expectations in last week’s report. Forecasters were looking in a range of 19-39 million bushels, but USDA reported a 55 percent increase in week-over-week sales to 43.1 million bushels. Rallying corn prices caused cancellations to increase to 5.1 million bushels.
Wheat sales weren’t as strong as those of corn and soybeans. However, they were strong because of a weaker dollar and limited exportable supplies in the Black Sea region. The weekly total was up one-third from the previous week to 19.2 million bushels.
$14 soybeans and $5 always sound nice, but what is the reality the US market could ever get there? On the last trading Friday in 2020 Brian Splitt with Ag Market.Net highlights how technical indicators are poised to take a run at those prices. This comes as soybeans settle firmly above $12 and corn is once again aiming at $4.50.
Splitt also looks at improving fundamentals that continue to support the market. Including South American weather and demand. Above all else is the macro or broader market and there Splitt is closely watching currencies, including the US dollar.
Hear Splitt’s comments for your self right here: