CORN-----

Corn closed the week 1 ¼ cents higher.  Private exporters did not announce any export sales. 

In the weekly export inspections report, U.S. corn exports last week of 22.1 million bushels (mb) are well below the roughly 40.6 mb per week corn exports will need to average through the end of August if the USDA's 1.775 billion bushel (bb) export projection is to be reached. Through the first 22 weeks of 2019/20, the largest weekly exports were just 27.5 mb and have averaged just 19.4 mb per week so far. Cumulative exports of 422 mb are down 52% from last year's 886 million at this time. 

In the weekly Energy Information Administration report, U.S. ethanol production rebounded strongly to 1.081 million barrels per day (mpbd) from 1.029 mpbd the week prior and was the third-highest production of the last 31 weeks. Ethanol production now needs to run only around 0.6% above last year levels through the end of August in order to reach the USDA's 5.375 bb corn for ethanol usage estimate versus the near 2% "needed" gain back in early November when production rates were still consistently running below year ago levels. 

U.S. ethanol stocks declined to 986 million gallons last week from 1.018 billion gallons the week prior and slipped back to a 2% year-over-year decline after two weeks of above year ago levels. 

Overall ethanol stocks remain quite comfortable, slightly below last year's same-week record level and in line with 2018 stocks at this time. 

Demand is improving for corn and should continue to improve into the end of February until South American supplies become available. 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------

Soybeans closed the week 10 cents higher. Private exporters announced sale of 130,000 metric tons (mts) of soybeans to Egypt. 

In the weekly export inspections report, U.S. soybean exports were 49.8 mb. Cumulative exports of 977 mb are up 23% from last year's 793 million at this time, leaving exports needing to average roughly 24.3 mb per week in order to reach the USDA's 1.775 bb export projection versus last year's 29.5 million per week average from this point forward. 

The USDA reported U.S. soybean crush in December was 184.7 mb, a new record for the month in surpassing last year's 183.8 mb, but was slightly below average market expectations of 185.7 mb (185.0-186.3 million range of ideas). Marketing year to date crush of 709 mb is slightly below last year's 715 million, leaving Jan-Aug crush needing to total 1.396 bb in order to reach the USDA's annual projection of 2.105 billion, reflecting a modest 1.4% increase from last year's 1.377 bb for the period. 

U.S. exports will likely slow between mid-February and May as South America over takes 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 by the end of the month unless South American weather turns adverse. 

 

WHEAT-------

For the week, Chicago wheat closed 5 ¾ cents higher, Kansas City wheat closed 7 cents higher and Minneapolis wheat 2 cents higher. Exports did not announce any sales. 

In the weekly export inspections report, U.S. wheat exports last week of 15.2 mb were below the roughly 18.9 mb per week wheat exports will need to average through the end of May in order to reach the USDA's 975 mb export projection. Cumulative exports of 611 mb are up 12.2% from last year's 545 mb at this time. 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. Russia's wheat crop is likely to be the second-largest in history, which will hurt U.S. exports after July. Stats Canada reported total wheat inventories fell to 24.98 mts versus 25.11 mts last year, but slightly ahead of estimates of 24.04 mts.

Strategy and outlook: The fundamentals do not suggest current price levels will be sustained. Prices have moved higher amid large speculative buying. 

 

LIVE CATTLE--------

Last week, live cattle closed 5 cents lower while feeder cattle closed $1.20 lower. Fed cattle trade in the North was mostly $121 live and $193 dressed - $1 to $2 lower than the week prior while trade in the South was primarily $121 - $1 lower. 

In the Fed Cattle Exchange online auction, the FCE reported a total of 627 head were offered for sale, in three lots (one lot each in Texas, Nebraska, and Kansas) all set for 1-9 day delivery. Asking prices were $122, but all cattle went unsold. 

The latest USDA steer carcass weights were down 6 pounds to 901 pounds compared to the prior week at 907, making them 21 pounds above last year. 

Weekly net sales of 18,700 metric tons (MT) for 2020.

Strategy and outlook: The cash market has turned lower and pressured the futures market. Summer live cattle futures have limited downside risk below $110 and feeder cattle futures have limited downside risk below $140.

 

HOGS-------

Lean hogs closed the week $5.10 higher. Iowa/Minnesota weekly hog weights were down slightly at 286.9 pounds versus 287.3 pounds last week and 285.6 pounds last year. 

Net pork sales of 29,500 MT for 2020. China bought 5,100 MT of U.S. pork in the week ending Jan 30 and took shipment of 16,200 MT.

Strategy and outlook: Strong exports, combined with an announcement by Tyson Food that they were filling orders of pork to China, forced heavy short covering. 

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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.