CORN
Corn futures are drifting lower this morning, with Mar unchanged at 3.78-1/2, Jul is down 1/4 cent to 3.85-1/4 and Dec is down 1-1/2 cents to 3.87. This morning, the USDA released their outlook forum projections for the 2020/2021 crop year. These numbers were predictably bearish. Ending stocks are expected to come in near 2.64 billion bushels, the highest since 1987. Stocks to usage ratio is expected to come in near 17.9%, the highest percent since 2004. This is mainly a pressure point on new crop contracts, hence the pressure in deferred months. Still, many are hopeful that once China begins to issue tariff waivers in March, export demand will increase. Mar futures briefly tested their 10-day moving average resistance level overnight but has since backed off, trading just off contract lows. Mar corn futures have traded at 3.80-1/2 for 16 sessions in a row now. Momentum indicators are still pointing sideways. Speculative funds were thought to have sold about 11,000 contracts of corn yesterday.
SOYBEANS
Soybean futures are moderately higher this morning, with Mar up 3-3/4 cents to 8.96-1/2. Jul is up 4 cents to 9.15, and Nov beans are up 3-1/4 to 9.20-3/4. USDA outlook forum estimates for the coming crop year were considered supportive with ending stocks expected near 320 million bushels and stocks to usage ratio at about 7.4%. This shows significant tightening of supplies from last year and should point to higher prices. Many are expecting China to become a major buyer of U.S. beans again once tariff waivers are issued in March. Exchange rates are moving favorably this morning as well, with the U.S. dollar down sharply from recent highs and the Brazilian real making a hook reversal higher. Mar soybeans back-tested nearby support this morning at the 10-day moving average level and are trading in the upper third of the day’s range. Stochastics may be creeping into overbought territory, though momentum is pointing higher.
WHEAT
Wheat markets are moderately higher this morning, with Mar Chi wheat up 2 cents to 5.62. Mar KC wheat is up 3 cents to 4.76-3/4, and Mar Mpls is up 3 cents to 5.32-1/2. According to the USDA outlook forum, ending stocks are expected to shrink this year by over 160 million bushels, which should leave ending stocks somewhere near 777 million bushels. Stocks to usage is expected to come down from 43.4% last year to 36.3% this year. This is partly due to the lowest winter wheat acreage since 1909. There is also a possibility that spring wheat acreage does not reach expectations or that yield does not reach expectations, which could further tighten stocks. The weakness in the dollar is supportive today, though sluggish corn prices are limiting gains in the wheat markets. Mar Chi wheat is trading near the middle of the day’s range so far after testing the highs from this week. Mar KC wheat tested and held support where the 10, 20 and 50-day moving average levels converge, and Mar spring wheat is trading directly below its 10-day moving average resistance level. Speculative funds are thought to have sold about 4,000 contracts of Chi wheat yesterday.
CATTLE
Cattle markets are showing moderate losses already this morning with Feb lives down 92 cents to 119.17. Apr lives are down 1.87, and Jun lives are down 1.70 to 109.22. Mar feeders are down 85 cents to 139.95, and Apr feeders are down 85 cents to 141.67. Beef prices are still drifting, currently at their lowest level since October 2018. Average weights jumped six pounds this week against normal seasonal tendencies for weights to drop, and production last week was also over 2.5% higher than the same week last year. Apr live cattle are testing the lows from February 12, and a break below could open up room for significant downside. Mar feeders are trading in a relatively quiet inside session after testing and failing to break through with nearby resistance at the upper Bollinger band. Feeders are a bit overbought currently.
HOGS
Hog markets are slightly lower so far this morning, with Apr down 5 cents to 66.82. Jun hogs are down 12 cents to 81.82, and Jul hogs are down 17 cents to 82.90. Carcass values are beginning to stabilize, though pork production was up nearly 7% from the same week last year. Trade has been mostly quiet since China announced they would be issuing tariff-free waivers on U.S. ag goods starting March 2. The index is also higher today for the first time in thirteen sessions. Apr hogs tested support early this morning at the 20-day moving average level but have since bounced higher and are now trading at the high of the day’s range so far. Apr hogs are still making an inside session, though the late morning climb to the day’s highs could indicate new buyer interest.
Author
Lisa Heder