Ag Market Commentary

Corn futures closed 1 to 1 3/4 lower on Friday. Trading will resume at 8:30 AM CST. Losses for the week and for the full year were both less than 2 cents per bushel! That’s actually a moral victory for the bulls given larger US carryover stocks, but mostly explained by the weakness in the dollar. Trader ideas for the USDA weekly Export Sales report were too bearish at 0.6-1.1 MMT. The USDA indicated old crop corn export sales of 1.245 MMT for the week ending December 21, with another 102,900 MT sold for 2018/19 crop delivery. The market needs a lot more weeks like that to exceed the current WASDE forecast. Brazil is getting some rain down into the dry southern states, and Cordoba in Argentina has also seen some showers to improve crop prospects. The Commitment of Traders report showed the large spec funds reducing their net short position in corn futures & options during the week ending December 26.

Soybean futures settled 2 to 6 cents higher on Friday but were closed on Monday. January soybean meal was 80 cents higher. Soy oil gained 58 points on a bullish USDA export sales week featuring 44,200 MT in new sales for the week. The Friday USDA weekly Export Sales report showed 17/18 soybean export sales of 974,700 MT for 2017/18 delivery, with another 81,300 MT for 2018/19. Meal sales were on the higher end of expectations at 288,300 MT and topped the 300,000 MT mark when you throw in 17,600 MT booked for next year. The CFTC Commitment of Traders report showed the spec funds adding 28,319 contracts to their net short position in the week ending December 26. That put them net short 69,091 contracts of futures and options on Tuesday night. USDA’s Fats & Oils report today is expected to show November crush of about 174 million bushels, with trade ideas running 173.5-175.0 million.

Wheat futures settled to 1 higher in KC HRW today, with the market building in a modest weather premium against weekend freeze damage. Areas with little or no snow cover could be at risk of winter kill, particularly southern and eastern KS. Some -7 to -8 degree F temps were recorded on Sunday. That said, winterkill is notoriously difficult to quantify ahead of the crop breaking dormancy in February. This morning, USDA indicated all wheat export sales for the week ending 12/21 were on the low side at 478,400 MT, with another 62,100 MT for 2018/19 delivery. The Commitment of Traders report showed the big manage money spec funds lightening up ahead of year end. They were still net short 145,735 contracts in CBT wheat on 12/26.

Live cattle futures settled $.32 to $1.55 lower led by the expiring December contract as it converged with the presumed cash market. Feeder futures were 40 to 45 cents higher. The CME feeder cattle index on December 28 was up 63 to $146.51. Wholesale boxed beef values were higher for both the day and the week. Choice boxes were 62 cents on the day and $3.34/cwt for the week. Select boxes were up $2.07 on Friday and up $5.10 for the full week. Estimated weekly FI cattle slaughter was 502,000 head. That is 13,000 head fewer than the same week last year. Cash trade was slow to develop, with trade reported at $195 late on Friday afternoon in the north, with $123 indicated for the south. Wind chills as low as -40F will interfere with movement of finished cattle to packers for a few days, with a warm up expected after mid-week. That makes the ones that can get there a bit more valuable.

Lean hog futures gave back some money ahead of the close, settling 27 lower to 22 higher. The CME Lean Hog Index for 12/27 was down 1 cents to $61.58. The USDA pork carcass cutout value was up 19 cents at $78.22. It advanced 95 cents per cwt for the week while the CME Index was falling. That’s a nice trick for the packers. The national base hog weighted average price was 34 cents higher at $58.27. The USDA weekly FI hog slaughter was estimated at 2.107 million head. That is up 37,000 head from the same week last year. USDA reported pork export sales for 2017 of 16,600 MT this morning, with 2018 sales for the week ending December 21 at 14,400 MT. Russia has confirmed an outbreak of H5N2 avian flu, with more than 660,000 birds culled thus far as a preventative measure.

Cotton futures are trading 7 to 55 points higher to start the new year. A weaker US dollar is contributing to the firmer tone in dollar denominated prices. They settled mixed on Friday, with nearby March 17 points lower. March futures matched their life of contract high on Thursday but backed off a bit to end the week. The weekly USDA Export Sales report showed sales of 163,700 RB for upland and 12,800 RB for old crop pima. There were another 32,500 RB of upland varieties sold for 2018/19 shipment. The USDA Adjusted World Price (AWP) was increased 262 points to 70.62 cents/lb on Thursday. It is a long way above loan rate! The Cotlook A Index for the 28th was 89.60, up 1.50.

Market Commentary provided by:

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