Corn closed the week 2 cents higher. Private exporters did announce any export sales.
In the weekly export inspections report, corn inspections totaled only 15.2 million bushels (mb) for the week ending Dec. 19, below the 42.3 mb needed each week to reach USDA's export estimate of 1.850 billion bushels (bb). This was the third lowest sales week of the current marketing year. Inspections for 2019-20 now total 300 mb, down 55% from the previous year.
In the weekly Energy Information Administration report, ethanol production surged to a 28 week high at 1,083 barrels per day. Year over year production increase was the highest since early June at 318 million gallons.
The January supply and demand report will be released on Jan. 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: The bullish weekly reversal has put to an end the fund selling that drove prices near contract lows. The new trade agreement will limit the downside risk for prices with the markets slowly rallying as fresh demand becomes apparent.
Soybeans closed the week 6 ½ cents higher. Private exporters did not announce any private sales.
In the weekly export inspections report, soybean inspections totaled 39.8 mb for the week, above the 29.5 mb needed weekly to reach USDA's export estimate of 1.775 bb. Inspections for 2019-20 now total 727 mb, up 25% from the previous year.
The market has been anticipating a record soybean crop in South America and updates on this year’s production from South America will be a major driving force for prices throughout the winter.
The 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.
For the week, Chicago wheat closed 14 ¾ cents higher, Kansas City wheat closed 18 cents higher and Minneapolis wheat 16 ¾ cents higher. Private exporters did not announce any export sales.
In the weekly export inspections report, U.S. wheat inspections totaled 21.3 mb for the week, above the 19.8 mb needed weekly to reach USDA's export estimate of 975 mb. Inspections for 2019-20 now total 520 mb, up 15% from the previous year.
Strategy and outlook: Chicago wheat 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.
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.
Last week, live cattle closed 82 cents higher while feeder cattle closed 45 cents higher. Fed cattle trade occurred in the North at mostly $122 live and $195 to $196 dressed - $2 to $4 higher than last week. Trade in the South was mainly $122 - $2 above last week’s price.
There was no Fed Cattle Exchange online auction this week due to the Christmas holiday and there will not be an auction this week due to the New Year's Day holiday.
The latest USDA steer carcass weights were down two pounds compared to the prior week at 904, making them 12 pounds above last year.
Net beef sales of 6,300 metric tons (MT) reported for 2019 were down 37% from the previous week and 34% from the prior four-week average.
Strategy and outlook: The strong cash markets and export sales will be bullish for the market.
Lean hogs closed the week 10 cents lower.
Net pork sales of 16,400 MT reported for 2019 were down 39% from the previous week and 42% from the prior four-week average.
The latest Iowa and Minnesota weekly hog weights came in at 285.9 pounds versus 287 pounds the week prior and 283 pounds last year.
The quarterly hog and pig report is bearish with all hogs and pigs at 103%, slightly above estimates of 102.9% kept for breeding at 102.1% versus 101.6% estimated at kept for marketing at 103.1% versus estimates of 103%.
Strategy and outlook: Futures should rally off technical support and expectations of large Chinese purchases of U.S. pork products now that the first phase of the new trade agreement will become effective in January.