Overnight Market Update- 2/12/21- Grains Bounce Higher Again Overnight


Grain markets are mostly higher overnight with soybeans and corn leading while wheat is mixed. It feels as though grains could be attempting to set up ranges to trade the balance of February and into March until more is known about U.S. spring weather and the pace of demand for corn and soybeans. China’s Dalian Exchange was closed due to holiday.

April and later live cattle futures held support Thursday, closing slightly higher, but the same cannot be said for front-month February. February closed lower for the second day, ending just slightly below the 20-day moving average. The February contract needs to come in line with cash. The cash market has not been tested to any great degree, but the general consensus is that cash will trade $1.00 higher. Feedlots are banking on it, having the confidence that waiting until the last minute will result in packers writing a larger check. This strategy has been working the past few weeks, so why not try it again. The market might be indicating a top is developing, but it is too early to tell. Weakness of boxed beef may be some cause for concern. However, strong demand should keep product movement brisk.

One would think that hog traders would show greater concern over a severely overbought futures market, but it seems to be spurring them on. It almost seems as if the Reddit crowd stepped into April hogs, but there is no indication of that. The market is both fundamentally and technically driven higher. Having said that, it is Friday and we are looking at a three-day weekend, which could trigger some profit-taking. Pork cutouts closed $2.01 higher Thursday at $88.87 with April pork cutout futures closing at $89.80. Friday is the final day to trade the February contract, bringing April to front-month and carrying a stiff premium to the index. Estimated Saturday slaughter is around 216,000 head.

Mixed to weaker equity trade around the globe overnight with U.S. futures pointing toward a lower open Friday morning after the S&P 500 notched its ninth record close of 2021 on Thursday. Analysts continue to make mention of the record low interest rates, record high equity prices, surging commodities and record cryptocurrencies as cause for caution but there doesn’t appear to be any risk of the easy money policies ending anytime soon. Energy markets are weaker to finish the week with spot crude oil prices looking to close lower in back-to-back sessions for the first time since the end of January. The U.S. Dollar Index is higher and attempting to close back above its 50-day moving average. Precious metals are mixed overnight.

Farm and Ranch Director Jesse Allen has our full update: https://lightningstream.com/ajax/GetODFile.ashx?call=MIDWEST&fileid=650