Overnight Market Update- 2/18/21- Grains Quiet Ahead of USDA Outlook Forum


Grain markets are mostly weaker overnight, although hard wheat contracts have managed to stay in positive territory. The USDA Outlook Forum begins later Thursday morning and should provide the trade with plenty of discussion points. Mostly weaker equity trade around the globe overnight, although Chinese indices briefly climbed to all-time highs after returning from the lunar new year holiday. The strength spilled over to their commodity markets as sharply higher prices were witnessed on the Dalian Commodity Exchange for corn, soybeans, soybean oil and soybean meal. Soybeans on China’s Dalian Exchange were up 3.02% while soybean meal was up 0.06% and corn was up 1.12%.

Cattle futures took a hit Wednesday as the market may have played the weather card long enough. Yes, there are a few plants that have shut down through Thursday due to concern for their employees as well as the shortage of natural gas. However, the market has been trending higher the past month, putting plenty of extra price premium in futures. Even with lighter cattle movement expected and higher cash prices expected, packers may have reached their threshold. The disruption will cost them money as they attempt to make up for lost production after the storm system moves through. Packers have not yet posted bids, but it would not be surprising if most will bid steady prices. It does look like it will be another nail-biter week as business may come down to the wire. Packers will want cattle due to strong boxed beef prices, but it may be another week of lighter purchases than desired. Cattle weights may suffer for a period as a result of the adverse weather, requiring more animals to fill the demand.

Hogs may have hit the proverbial ceiling in the April contract as Wednesday was the second day of a lower high after the peak on Friday. Now that there was some significant selling of futures, the market might continue to correct from its overbought status for another day. Cutouts declined, adding to the caution of traders. Packers have been able to procure a good amount of hogs, which may keep cash price steady the rest of the week. Farms will be willing to move hogs and get current as the adverse weather subsides, leaving plenty for packers to purchase. Projected Saturday slaughter is 254,000 head. The Commitment of Traders report for the week ended Feb. 9 showed funds net long 56,176 contracts, the highest in nearly two years, making the market ripe for fund liquidation even though fundamentals are friendly.

In the U.S. energy prices are holding together but crude oil is flirting with unchanged and staring at the prospect of the first lower close in 5 sessions. Temperatures slowly warm across the United States which should being the South out of their deep freeze the next several days. The U.S. Dollar Index is lower, reversing some of its recent gains. Precious metals are mixed.

Farm and Ranch Director Jesse Allen has our full update: