Morning Market Report- 3/12/21- Grains Remain Choppy in Overnight Trading


Grain markets are mixed to weaker with Kansas City wheat and soybean oil the only ag markets in positive territory. The ag space has been especially choppy of late, and that could continue into the end of the month reports. Soybeans on China’s Dalian Exchange were up 1.15% while soybean meal was up 0.31% and corn was down 0.63%.

Mixed equity trade overnight following the fresh record highs set Thursday on Wall Street. Stock markets received copious amounts of bullish news this week with the signing of President Biden’s stimulus bill Thursday and the European Central Bank’s decision to conduct bond purchases in Q2 at a “significantly higher pace than during the first months of this year.” This should keep rates low and equities fueled by cheap money. Energy markets are firmer overnight as is the U.S. Dollar index which is up over 0.5%. Precious and industrial metals are weaker overnight.

Hog futures exploded higher again, setting new contract highs across the board. April led the charge finally breaking out to a new contract high. Even though weekly export sales were 46% below last week and down 17% from the four-week average, the market did not care. A lower National Direct Hog Report did not phase traders wanting to continue to add to long positions. The new strain of African swine fever that has spread across China continues to remain a bullish scenario for demand of U.S. hogs. It has been another banner week for futures, making it ripe for some profit-taking Friday as futures are again in overbought territory. Saturday’s slaughter is project to be 112,000 head.

There was not much fanfare in cattle futures with price swings of about $1.00 in most contracts. Futures were able to close higher in all but front-month April as its strength may be limited to cash. Cash cattle did not trade higher Thursday, nor were they expected to. Once business was done earlier in the week, there was little hope for better prices. Futures are trying to turn higher but are having a difficult time breaking out to the upside. Open interest with funds net-long leaves the market susceptible to heavy selling if they get bored with a market that is not trending higher, and one that may not be supported with stronger underlying cash. Front-month April holds a premium to cash and may continue to do so for a few weeks in anticipation of stronger seasonal demand and higher cash. However, five weeks of steady cash and fluctuating boxed beef prices may not support much upside potential. Weekly exports were disappointing compared to the previous week but were higher than the four-week average. Futures are not expected to do much Friday, but rather coast to the end of the week.

Farm and Ranch Director Jesse Allen has the latest: