Corn closed the week 4 ¾ cents lower. Private exporters announced sale of 111,252 metric tons (mts) of corn to Japan for 2020/21, 124,355 mts of corn to Mexico for 2019/20 and 134,000 mts of optional origin corn to South Korea.
In the weekly export inspections report, U.S. corn exports last week were 26.3 million bushels (mb), but still solidly below last year's 38.1 mb and the average "needed" pace of 40 mb - a level still not achieved a single time through 21 weeks of the 2019/20 marketing year. Cumulative exports of 400 mb are down a massive 53% from last year's 850 million, leaving exports needing to average roughly 40 mb per week through the end of August in order to reach the USDA's 1.775 billion bushel (bb) export projection.
In the weekly Energy Information Administration report, U.S. ethanol production fell to a 12-week low of 1.029 million barrels per day (mbpd) from 1.049 mbpd the week prior. U.S. ethanol stocks continue to rise, bumping up to 1.018 billion gallons (bg) from 1.009 bg the previous week, the highest in 26 weeks and sixth-highest weekly stocks ever since EIA began reporting weekly data in June 2010.
Demand is improving for corn and should continue to improve into the end of February until South American supplies become available. An increased number of animals on feed should improve feed demand this quarter.
Strategy and outlook: The bullish weekly reversal should limit the fund and speculative selling interest. The sluggish fundamentals will limit the upside potential and producers should sell inventory on rallies.
Soybeans closed the week 29 ½ cents lower. Private exporters announced sale of 30,000 mts of bean oil to Egypt.
In the weekly export inspections report, U.S. soybean exports were 38.2 mb, which is the second-lowest exports of the last 15 weeks. Cumulative exports of 927 mb remain up a solid 23.1% from last year's 753 million at this time, leaving exports needing to average roughly 25.2 mb per week through the end of August in order to reach the USDA's 1.775 bb export projection.
Normally, February looks to see slower U.S. export sales as early planted beans in Northern Brazil begin to come to harvest and hit the world market at a price lower than any U.S. posted price. Because Brazil can only store up to 25% of their harvest, they are forced to forward sell approximately 75% of their early harvested soybeans. It is the period between mid-February and May that South America overtakes the U.S. as the primary port of origin for beans. This will leave weather on late-maturing crops as the sole bullish factor for soybean values. February in Brazil and Argentina is like August here as it’s a key yield-developing month for three-quarters of the crop.
Strategy and outlook: Futures are anticipating that South America will produce a record soybean crop this will surely cut into US exports and limit the upside potential for soybean values. Futures look to probe key support in February unless South American weather turns adverse.
For the week, Chicago wheat closed 18 ¼ cents lower, Kansas City wheat closed 19 ½ cents lower and Minneapolis wheat 11 cents lower. Egypt bought 180,000 mts of wheat from France.
In the weekly export inspections report, U.S. wheat exports last week were poor at only 8.2 mb and a new marketing year low through 34 weeks of 2019/20. Last week's exports were also well below the roughly 18.7 mb per week average "needed" to reach the USDA's 975 mb export projection. Cumulative exports of 596 mb up nearly 13% from last year's 529 million versus the USDA export projection reflecting an expected 4% increase on the year.
Major winter wheat producing states issued their monthly crop condition ratings last week. Kansas declined to 34% from 40% good or excellent, Oklahoma declined to 36% good or excellent from 40%, Texas dropped to 20% from 23% good or excellent and Nebraska fell to 59% good or excellent from 70% good or excellent.
February is the last month before the winter wheat crop breaks dormancy, and grows into the June harvest. Thus with winter wheat still in the dormant stage, price direction will come from demand. Demand trends have been consistent but unimpressive due to the large supplies of wheat worldwide.
Strategy and outlook: The fundamentals do not suggest current price levels will be sustained. Prices have moved higher amid large speculative buying.
Last week, live cattle closed $4.62 lower while feeder cattle closed $3.35 lower. Fed cattle traded in the South at $122 per hundredweight, $2 lower. Trade in the North was mostly $121 to $121.50 live and $194 to $195 dressed, $1.50 to $5 per hundredweight lower.
The Fed Cattle Exchange online auction had three lots listed for sale, totaling 477 head, all were set for 1-9 day delivery. Asking prices were at $123, but none sold. There were two lots from Kansas and one from Texas.
The latest USDA steer carcass weights were up three pounds compared to the prior week at 907, making them 21 pounds above last year.
This week's net sales of 21,700 metric tons (MT) for 2020.
The biannual cattle inventory report showed all cattle and calves at 94.4 million head, slightly above the pre-report Bloomberg survey of 94.3 million head, the first decline in 6 years. The report had all cattle and calves at 99.6% versus estimates of 99.5%, beef cows at 98.85 versus estimates of 99.4% and the annual calf crop at 99.3% versus estimates of 99.6%.
Strategy and outlook: As feared, the cash market weakened quickly as the futures market has entered into a free fall amid bearish news of the spread of coronavirus as the market fears the virus will hurt national economies.
Lean hogs closed the week $11.75 lower.
Iowa/Minnesota weekly hog weights were up slightly at 287.3 pounds versus 286.6 pounds last week and 284.1 pounds last year.
This week's net pork sales of 34,100 mts were announced for 2020.
Strategy and outlook: The futures market has entered into a free fall amid bearish news of the spread of coronavirus as the market fears the virus will hurt national economies.