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Markets: All commodities continue to rise
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Markets: All commodities continue to rise

CORN------

Corn closed the week 11 ¼ cents higher. Private exporters announced an export sale of 102,615 metric tons (mts) to an unknown destination. 

In the weekly export inspections report, U.S. corn exports last week of 35.9 million bushels (mb) were down from the previous week's 49.4 mb, but right in line with average exports over the previous four weeks of 36.4 mb per week. Cumulative exports of 587 mb maintain a substantial 73% increase over last year's 339 mb four months through the 2020/21 marketing year. Based on the USDA's record 2.650 billion bushel export projection, corn exports will need to average roughly 56 mb per week versus last year's 38 million per week average from this point forward. 

In the weekly Energy Information Administration report, U.S. ethanol production was 935,000 bpd versus 934,000 the prior week and down from 1,062,000 bpd a year ago. Ethanol stocks fell to 23.3 mb for week ending Jan. 1 versus 23.5 mb the prior week and 22.5 mb last year.

Strategy and outlook: As we enter into the key growing period of South American production, producers should maintain their re-ownership of sold inventory with futures and options. As values approach key overhead resistance, producers should consider accepting profits on long positions and beginning to hedge 2021 production.

 

SOYBEANS------

Soybeans closed the week 66 ¾ cents higher. Private exporters announced sales of 343,350 mts of soybeans to an unknown destination and 204,000 mts of soybeans to China. 

In the weekly export inspections report, U.S. soybean exports, for the week ended 12/31/20, were 48 mb and down notably from the previous week's 80.9 mb and the most-recent four-week average of 92.3 mb. Last week's exports were the lowest in 14 weeks and second-lowest of the 2020/21 marketing year so far.  Cumulative export inspections of 1.416 billion bushels are up 77% from last year's 802 million, leaving exports needing to average roughly 20.5 mb per week in order to reach the USDA's 2.2 billion bushel export projection versus last year's 23.2 million per week average from this point forward.

In the Census crush report, USDA reported U.S. soybean crush in November at 191 mb versus 196.6 million October and easily record high for the month in surpassing 2018's 178.1 million, as well as being notably higher than last year's 174.6 mb. USDA reported U.S. soybean oil production in November was 2.207 billion pounds versus 2.282 billion in October and 2 billion last year, with the soybean oil yield ticking down to 11.55 pounds/bushel from 11.61 in October, but still running solidly above last year's 11.45 in Nov. USDA reported 431.7 mb of corn was used for ethanol production in November, down only slightly from 434.2 mb in October (revised up from 432.7 million originally), but 25 mb less than year ago November usage of 456.7 mb after September and October usage was down only 4.2 and 4.9 mb year-over-year.

Strategy and outlook: Producers should have sold soybeans off the combine and should have re-owned production using futures and options in deferred contracts. As values approach key overhead resistance, producers should consider accepting profits on long positions and beginning to hedge 2021 production.

 

WHEAT-------

For the week, Chicago wheat closed 3 ¾ cents lower, Kansas City wheat closed 12 cents lower and Minneapolis wheat 8 ½ cents higher. Private exporters did not announce any export sales. 

In the weekly export inspections report, U.S. wheat exports last week were disappointing at only 11.9 mb and were the second lowest of the last eight weeks. Cumulative export inspections of 546 mb are nearly identical to last year's 548 million, leaving wheat exports needing to average roughly 18.6 mb per week in order to reach the USDA's 985 mb export projection versus last year's 17.6 million per week average.

Winter wheat ratings as of end of December: Kansas good-to-excellent 46% versus 33% on 11/30/20, Nebraska 37% good or excellent versus 35% in November, Colorado 19% good or excellent versus 20% in November and Montana 65% good or excellent versus 74% on 11/30/20. Wheat in North Dakota is only rated 26% good or excellent versus 41% in November and South Dakota at 37% good or excellent versus 57% in November. Oklahoma reported winter wheat conditions at 46% good or excellent versus 52% at end of November and 40% a year ago.

Strategy and outlook: Wheat is following corn and soybeans higher. With poor growing conditions in the US, wheat has to maintain a positive price relationship with corn and soybeans or winter wheat will be abandoned this spring and spring wheat acres will be much smaller than expected.

 

LIVE CATTLE-----

Last week, live cattle closed 62 cents lower while feeder cattle closed $2.92 lower.

Last week, light to moderate fed cattle cash trade in the North occurred at $110 to $112 live and $176 to $177 dressed – steady to $1 higher than last week. Light to moderate volumes in the South traded at mostly $112 – primarily steady.

Last week, the Fed Cattle Exchange had 1,016 head offered for sale with 42 head sold at an average of $112, $1 higher than last week's sale. The Fed Cattle Exchange held a second sale on Friday and 64 head were reported sold at $112. 

The latest USDA steer carcass weights were down 8 pounds from the prior week at 913, making them 8 pounds above last year.

Last week's beef export sales saw a net sales reduction of 1,200 mts with shipments of 12,100 mts reported. Accumulated exports for 2020 totaled 851,800 MT, up 3% from the 823,500 MT exported in 2019.

Strategy and outlook: Supplies of cattle are expected to increase in January and extend until April. These supplies are expected to cap rallies during the winter months and exportable demand is needed to keep values from declining from current levels. Producers should have window or fence strategies to protect the downside but allow for upside potential.

 

HOGS----

Lean hogs closed the week $1.52 lower.

Weekly Iowa/S. Minnesota hog weights for week ending January 2, 2021 saw weights jump to 291.6 pound versus 288.3 pounds last week and 288.9 pounds last year.

Last week's net pork sales reductions of 8,600 mts with shipments at 26,700 mts. Accumulated exports for 2020 totaled 1,938,000 MT, up 16% from the 1,624,000 MT exported in 2019.

Strategy and outlook: Strong exports of US pork and higher product values have rallied futures with seasonal strength into the third week of January. As the market rallies into resistance, producers should at a minimum, use a put/call spread to lock in profits.

Michael Baron provides estate planning guidance at Great Plains Diversified Services in Bismarck, North Dakota. Email him at KeeptheFamilyFarm@gmail.com.

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