Morning Market Report- 3/19/21- Grains Rebound Overnight


Grain markets are higher across the board overnight, bouncing slightly to close what has been a mostly lower week. There is one more full week of trade before the important USDA reports at the end of the month which will help set the tone through spring. Soybeans on China’s Dalian Exchange were down 1.8% while soybean meal was down 0.49% and corn was up 0.15%. Energy markets have stabilized overnight with crude oil pushing back over the $60.00 per barrel mark after debilitating losses Thursday. The U.S. Dollar Index is stable overnight. Gold is firmer overnight while copper and silver are weaker.

Global equity markets are a mixed bag overnight with weakness in Asia and Europe while U.S. futures suggest a steady to higher open Friday morning. The Financial Times reported U.S. and Chinese officials had engaged in a fiery exchange at the start of the first high level meeting between Washington and Beijing since President Biden took office. At the heart of the exchange were human rights accusations hurled toward China by the U.S. while Chinese officials accused the U.S. of invading through the use of force to topple other regimes or to massacre the people of other countries. President Biden and President Xi are expected to talk later Friday.

Market pressure permeated across many commodity markets Thursday with much of the pressure stemming from the large decline of crude oil. You may wonder why crude oil has so much influence across a broad spectrum of the markets but it does because many times it is a barometer of other economic fundamentals or sometimes rumors. This would explain why both cattle and hog futures were under pressure despite positive fundamentals. Cash cattle traded higher in the North, which should have supported the market. Exports sales were also good with sales 24% higher than last week and 39% higher than the four-week average. This was needed in order to keep optimism alive and well as we move through spring. It certainly was good to see some higher cash this week, but it may be confined to the North. Cattle in the South look to remain steady with last week.

Hog futures did an about face Thursday with the exception of front-month April. Futures posted double-digit losses as contracts nearly matched the weakness of cattle. Fundamentals were bullish all around, showing no reason for the sell-off other than from outside influence. Packers remain aggressive even though margins are tightening. The large increase of cutouts indicates this market has more upside potential. The weakness of futures has not changed price direction with traders remaining interested in buying and holding long positions. Let’s face it, hogs are not overly abundant, and demand is strong. The Export Sales report showed sales up 23% from the previous week and 5% above the four-week average. Higher prices are not slowing down international interest. Saturday slaughter is projected at 78,000 head.