CORN-----

Corn closed the week 4 ¼ cents lower. Private exporters did announce any export sales.

In the weekly export inspections report, USDA reported inspections of 16.099 million bushels (mb) of corn versus 39.7 mb that is needed to reach the current USDA export projection.

U.S. ethanol production fell to 1.066 million barrels per day (mbpd) from 1.083 mbpd the week prior but was 5.4% above last year's same-week production of 1.011 mbpd, the largest year-over-year%age increase of the 2019-20 corn marketing year so far.

U.S. ethanol stocks last week declined to 883 million gallons from 902 million gallons the week prior and were 89 million gallons below year ago same-week stocks of 973 million gallons. U.S. ethanol stocks have declined for three consecutive weeks and are at risk of declining to the lowest level, on a same-week basis, in five years with additional declines over the next two weeks.

The January supply and demand report will be released on January 10 and traders are hoping the USDA will decrease their final 2019 corn production estimate and increase their demand estimates, slowly tightening the balance sheets. Farmer selling should increase after the first of the year as farmers will need to move some corn to maintain the quality of the stored crop, but basis levels should narrow through the winter months.

Strategy and outlook: After corn scored a bullish weekly reversal, a 3 week rally unfolded. Now a bearish technical reversal and overall bearish fundamentals could put an end to that rally.

SOYBEANS-----

Soybeans closed the week 1 cent lower. Private exporters did not announce any private sales.

In the weekly export inspections report, the USDA reported soybean inspections of 33.491 mb versus 27.3 mb that is needed weekly to reach the USDA export projection.

The USDA reported November U.S. soybean crush was 174.6 mb, below average market expectations of 175.9 mb and down from 187 million in October and 1.9% below last year's record November crush of 178.1 mb. For the first quarter of 2019-20, crush of 524 mb was down 1.3% from last year's 530.9 mb.

The January 10 supply and demand report has the potential to be a major market mover as the USDA will issue the final production forecast for the 2019 crop and update the demand figures. Export forecasts could increase substantially given the Chinese trade agreement. Traders are going to look for the USDA to decrease their final 2019 soybean production estimate and to increase their demand estimates, slowly tightening the balance sheets. Farmer selling looks to be a minimum this winter as producers are more interested in selling corn and holding onto their soybeans in case another weather problem develops in South America and Chinese demand dramatically improves and prices move higher.

Strategy and outlook: Futures bounced off long term support with strong end user buying supporting values. Prices are likely to probe weekly resistance amid the new trade agreement. The timing of Chinese purchases will prove interesting and indicative of how the balance sheets will be affected.

WHEAT-----

For the week, Chicago wheat closed 2 ¼ cents lower, Kansas City wheat closed 5 ¼ cents lower and Minneapolis wheat 6 cents lower. Private exporters did not announce any export sales.

In the weekly export inspections report, the USDA reported inspections of 11.465 mb of wheat inspections versus 18 mb that is needed each week to reach the USDA annual forecast. The winter wheat crop is now in dormancy until March when warmer temperatures bring wheat out of dormancy.

The January 10 report will show updated USDA demand projections and the USDA will give us the first glimpse of how many winter wheat acres have been seeded this year by U.S. producers. With increasing global wheat stocks amid global wheat production, the wheat market can afford to have smaller seeded acres in 2020. There is a strong seasonal tendency for wheat to rally during the first two weeks of January, before turning lower until wheat begins to break dormancy.

Kansas winter wheat conditions slipped to 40% good or excellent from 44% in November, Nebraska dipped to 70% versus 74% in November, Oklahoma is rated 40% versus 52% in November.

Strategy and outlook: Chicago and KC wheat both rallied and failed at key weekly resistance at a time when the commercials have become aggressive sellers. This should put an end to the rally that prices have been seeing as the fundamentals do not support the current values.

LIVE CATTLE-----

Last week, live cattle closed $1.85 lower while feeder cattle closed $1.85 lower. Fed cattle trade in the North was $124 live and $199 to $200 dressed, thus far - $2 to $5 higher than last week. Trade in the South was $124 this week - $2 higher.

There was no Fed Cattle Exchange online auction this week due to the New Year's Day holiday.

The latest USDA steer carcass weights were down 2 pounds compared to the prior week at 904, making them 12 pounds above last year. Net beef sales of 3,700 metric tons (MT) reported for 2019 were down 42% from the previous week and 45% from the prior four-week average.

Strategy and outlook: The strong cash markets and export sales will be bullish for the market.

HOGS-----

Lean hogs closed the week $1.92 lower.

Net sales of 3,300 MT reported for 2019 - a marketing-year low - were down 80% from the previous week and 87% from the prior four-week average.

U.S. pork sales included net reductions for China of 13,300 MT for 2019 delivery, with net purchases by China of 9,700 MT for 2020 delivery.

The latest Iowa/Minnesota weekly hog weights came in at 287.1 pounds versus 285.9 pounds last week and 285.9 pounds last year.

Strategy and outlook: Futures should rally off technical support and expectations of large Chinese purchases of US pork products now that Phase 1 of the new trade agreement will become effective in January.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. The home office is in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb.