Overnight Market Update- 2/19/21- Markets Firmer to Start Friday

Grain markets are higher across the board overnight with gains led by soybean oil and soybeans. Traders are looking ahead to Friday morning’s continuation of the USDA Outlook Forum where 2021/22 balance sheets will be released. It is unlikely these numbers will affect day-to-day trade but will help shape discussion heading into the March suite of USDA reports. Soybeans on China’s Dalian Exchange were up 0.34% while soybean meal was down 0.66% and corn was up 0.39%.

Cattle futures moved lower again Thursday as the second day of liquidation took place. The cattle complex certainly has not turned bearish, but a correction was in order and has been running its course. To some extent, traders are looking past the winter storm and have determined there was too much price premium of futures over cash. Technically, this has not changed the trend with April closing just below the 20-day moving average support while later contracts held that support. This might gain the interest of technical traders that want to add to their long positions. The cash market has not really been tested yet, but a general anticipation of higher cash is prevalent. The lack of aggressive bids being placed by packers this late in the week may mean that they want to play hardball. With some plants shut down, they may not care this week about numbers. If cattle are carried over into next week, it could make the market very interesting as packers will want more cattle while at the same time, feedlots will want to move cattle. Strong cutouts indicate good demand. As long as that demand is there, packers will want to meet it. The Cattle on Feed report will be released Friday afternoon. The average estimate for cattle on feed is 100.9%, placements at 99.9% and marketings at 94.7%.

Hogs are resilient with futures rejecting the lows of the day and closing slightly higher. Traders clearly took advantage of the weakness in futures to step back into the market. Strong demand is keeping packers aggressively bidding to obtain the hogs they need. The weather has not hindered hog purchases with packers maybe more aggressive as the weather system moves through and consumers return to grocery stores to stock up on pork. Higher cutouts Thursday will keep plants wanting to increase chain speed to take advantage of continued strong demand. Exports sales will be out Friday after being delayed one day due to the holiday on Monday. The report will have an impact on where futures move from here. Saturday slaughter is estimated at 254,000 head.

Equities are mostly firmer overnight with U.S. futures suggesting a higher open later Friday morning. The energy system in Texas is beginning to recover as the weather slowly improves with 65 to 70-degree temperatures expected by mid-week next week. This has allowed energy prices to moderate some, although spot crude oil prices are still near 60.00 per barrel. After a sharp selloff yesterday, natural gas prices have stabilized overnight. The U.S. Dollar index is weaker overnight and once again challenging its 50-day moving average for support. Precious metals are mixed overnight with gold weaker and silver firmer.

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