Corn closed the week 1 ¼ cents lower. Private exporters did not announce any export sales.
In the weekly export inspections report, U.S. corn exports were 31.3 million bushels (mb) and did reflect a new marketing year high. However, they were well below the roughly 39.5 mb per week estimated corn exports will need to average through the end of August in order to reach the USDA's 1.725 billion bushel (bb) export projection. Cumulative exports of 485 mb are down 49% from last year's 952 million.
In the weekly Energy Information Administration report, U.S. ethanol production rose modestly to 1.04 million barrels per day (mbpd), or 306 million gallons per week (mgpw), from 1.033 mbpd (304 mgpw) the week prior and was 4.4% above last year's same-week production of 996 thousand bpd (293 mgpw).
At the USDA Outlook Conference the UDSA announced corn plantings at 94 million, up 2 million from last year's conference. They forecast yields at 178.5 bpa with a total production of 15.46 bb versus total usage of 14.74 bb. They did increase exports from 1.725 bb this marketing year to 2.150 bb at the forum. This resulted in ending stocks at a robust 2.637 bb. If realized, this would be a new all time record.
Strategy and outlook: The USDA outlook forecast sheds a bearish light on the corn market. Any weather related rallies need to be sold as producers rid themselves of both old and new crop inventories.
Soybeans closed the week 5 cents lower. Private exporters did not announce any export sales.
In the weekly export inspections report, U.S. soybean exports last week of 36.5 mb and continued to run above the average "needed" pace of 25.5 mb per week for the time being prior to the seasonal ramping up of Brazilian exports.
Cumulative exports of 1.039 bb are still up 19% from last year's 875 million, but declining after having been up 26% just seven weeks ago. Soybean exports from this point forward last year averaged 28.7 mb per week.
The monthly National Oilseed Processors Association crush report said its members crushed 176.9 mb of soybeans in January, well above average market expectations of 173.7 million, up solidly from 174.8 million in December, 3.1% above last year's 171.6 mb and reflected a new all-time record NOPA crush for any month. With the record crush, soybean oil production of NOPA members rose to a new all-time record high, regardless of month, of 2.035 billion pounds, up from 2.012 billion in December and compared to year ago Jan production of 1.993 billion pounds.
At the USDA Ag Outlook Conference, the USDA forecast US soybean acres at 85 million, unchanged from a year ago with yields at 49.8 bpa and a total production at 4.195 bb versus total usage of 4.314 bb as they increased exports from 1.825 bb in the current marketing year to 2.050 bb for 2020/21. This resulted in ending stocks at 320 bb. Which if realized, would be the tightest since the 2016/17 marketing year.
Strategy and outlook: A record South American soybean crop this will surely cut into U.S. exports and limit the upside potential for soybean values. Futures tested key downside support and may try and rally off of it, although the upside is limited until spring planting.
For the week, Chicago wheat closed 9 ½ cents higher, Kansas City wheat closed 2 ½ cents higher and Minneapolis wheat 2 ½ cents higher. Exporters did not announce any export sales.
In the weekly export inspections report, U.S. wheat exports last week were 18.4 mb but were below the roughly 20.8 mb per week wheat exports will need to average through the end of May in order to reach the USDA's 1 bb export projection. Cumulative exports of 652 mb are up 12.5% from last year's 579 million. Wheat exports from this point forward last year averaged 22.1 mb per week.
The Australian Bureau of Agricultural and Resource Economics and Sciences reduced their estimate of 2019 Australian wheat production to 15.2 million metric tons (MMTs) from their December forecast of 15.85 MMTs.
Texas winter wheat crop is currently rated 35% good or excellent versus 24% good or excellent last week and 30% good or excellent last year.
At the USDA Outlook Conference, the UDSA predicted wheat acres at at 45.2 million acres, down from 47 million a year ago. Using a yield forecast of 48.2 bpa, this resulted in total production of 1.836 bb with total usage forecast at 2.139 bb. This resulted in ending stocks at 777 mb, which if realized, would be the lowest since the 2014/15 marketing year.
Strategy and outlook: Weekly reversals have put an end to the speculative buying. Prices have turned lower as the fundamentals do not suggest current price levels will be sustained.
live cattle closed $2.35 lower while feeder cattle closed $1.25 higher.
A light to moderate trade was reported in the South at $118 to $119, $2 to $3 lower than the week prior. A light live trade took place in the parts of the North at mostly $119, $3 lower than the week prior. On dressed basis, trade occurred at $190, down $3 from the week prior.
In the Fed Cattle Exchange online auction, the FCE reported a total of 413 head were offered for sale, in four lots. Two lots in Kansas sold 140 head at $119, one lot in Texas of 175 head sold at $119 and one lot in Nebraska asked $119 and went unsold.
The latest USDA steer carcass weights were down four pounds compared to the prior week at 897, making them 12 pounds above last year.
Last week's net sales of 17,500 metric tons (MT) for 2020.
The monthly Cattle On Feed report is considered bullish for the industry with on feed supplies at 102.1% of last year, slightly less than the average trade guess of 102.4% and down from last month's 102.3%. Placements came in at 99.4% of last year, well below the average guess of 101.4% and well down from last month's 103.5%. Markets were also better than expectations at 101.1% versus guesses of 100.7%, although this was well below last month's 105.3%.
Strategy and outlook: Summer live cattle futures have tested longer term fundamental support and have limited downside risk below $110 and feeder cattle futures have limited downside risk below $140 with upside potential to $160.
Lean hogs closed the week $2.87 higher. Iowa/Minnesota weekly hog weights are 285.3 pounds versus 285.5 pounds last week and 286.2 pounds last year.
Last week's net pork sales of 23,700 MT for 2020. China bought 1,100 MT of U.S. pork and took shipment of 15,000 MT.
U.S. pork exports in December were a record-high 681 million pounds, up 29% from a year ago driven by exports to China. 222 million pounds of pork was shipped to China in December, equaled 33% of total pork exports.
USDA expects commercial pork production for 2020 at a record 28.89 billion pounds, almost 5% higher than 2019. For 2020, pork exports are forecast at about 7.38 billion pounds, up 17% from 2019.
Strategy and outlook: Large supplies of hogs are keeping pressure against the cash markets and front-month futures. Hog weights are expected to rise into the spring.
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.