Ag Market Commentary

Corn futures are trading to 1 cent per bushel higher this morning. They closed 1 to 2 cents higher on the first trading session of the new year. The USDA weekly Export Inspections report showed very typical holiday week shipping of 683,898 MT. Last year it was 638,577 MT for the same week. Soil moisture is expected to decline in southern Brazil, Argentina and Uruguay over the next week, driven by higher temps and limited rainfall during pollination. The USDA Grain Crush report showed 525 million bushels of corn used for ethanol and other industrial uses in November. Of that, 475.7 million went to fuel ethanol production, which was up 1.2% from October and up 5.2% from November 2016.



Soybean futures are currently 3 to 5 cents higher. They settled 2 to 6 cents higher on Tuesday. Meal futures were up 90 cents/ton. Soy oil closed 30 points higher. The USDA weekly Export Inspections of 1.139 MMT were down 11% from the previous week and lagged the same week in 2016 by 28%. USDA’s Fats & Oils report was expected to show November crush of about 174 million bushels. The trade guess was very close, with the actual number at 173.33 million bushels. Soy oil stocks on November 30 were 1.379 billion pounds. Argentine planting continues to lag in BA and La Pampa due to dry soils and high temps. Argentina has begun the phased unwinding of their soybean export tariff announced back in 2016.



Wheat futures are trading 1 to 4 cents higher this morning with MPLS spring wheat the strongest as the spreads bounce back. They were higher in all three markets yesterday, with KC HRW up 5 to 7 cents. Chicago SRW was up 6 to 7 cents and MPLS spring wheat advanced 3 to 3 cents. The main story was freeze damage, which is notoriously difficult to quantify. USDA indicated wheat export loadings totaled a paltry 274,506 MT for the week ending December 28. That was down 32% from the same week in 2016. Shipments since June 1 are 37 million bushels smaller than last year. The EU Commission cut projected 2017/18 EU wheat exports from 27 MMT to 26 MMT, while also trimming their estimate of last year’s production by 500,000 MT.



Live cattle futures were up $1.42 to $1.92 on Tuesday. Feeder futures had more dramatic numbers, up $2.07 to $4.20 per hundred. Feedlots succeeded in extracting higher cash prices on Friday, with $123 reported in the south and $195 in the north. High wind chill readings are limiting ability to move cattle in some areas, but that should abate by mid-week. Rates of gain may also be slowed by the cold temps. The CME feeder cattle index on December 29 was $156.02, up a sharp $9.51 from the previous day. Wholesale boxed beef values were sharply higher on Tuesday. Choice boxes were on average $2.24 higher than Friday, with Select boxes up $3.59 per cwt. The choice/select spread is tightening seasonally and is down to $8.57. Estimated week to date FI cattle slaughter is 116,000 head. That is 3,000 head more than last week, but 14,000 fewer than the same week last year due to smaller numbers on both Monday and Tuesday.



Lean hog futures ended Tuesday mixed, with the front contracts lower but summer futures in the plus column. Nearby February was down $1.05 but at $70.72 still maintained a $10 premium to the Index. The CME Lean Hog Index for 12/28 was up 14 cents at $61.72. The USDA pork carcass cutout value was down 11 cents in the PF report at $78.33. Pork bellies were up sharply $(4.92). The national base hog weighted average price was up 28 cents to $59.02. The IA/MN region was up 24 cents at a weighted $59.43. The USDA week to date FI hog slaughter was estimated at 460,000 million head. That is up 103,000 head from last week and 11,000 larger than the same week last year. Last week’s estimate was trimmed 5,000 head from the preliminary figure to put it at 2.102 million for the week.



Cotton futures are trading 1 to 8 points higher this morning. They posted triple digit losses on Tuesday. Asset allocation models pared down positions in some of last year’s winners, which included cotton. The dollar was down hard and supporting export potential by trading at the lowest level since September. The dollar index is modestly higher this morning. The USDA Adjusted World Price (AWP) was increased 262 points to 70.62 cents/lb on Thursday. The Cotlook A Index for the 29th was UNCH at 89.60.






Market Commentary provided by:

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