BROCK MORNING COMMENTS
LEADING OFF: Grain markets were mostly quiet but soft overnight as traders position and wait for Monday’s USDA key USDA reports. At the morning break, corn and wheat are both down a penny, while soybeans are up 4 to 5 cents. March soybeans are currently sporting a gain of nearly 20 cents for the week. Cotton is down slightly this morning and rice is also lower.
This morning’s monthly jobs report showed Non-Farm Payrolls rising by 50,000, below the 70,000 that analysts were on average expecting and down from 56,000 in November, which was revised lower from last month’s estimate. The Labor Department also revised lower its October jobs estimate. But unemployment dipped to 4.4%, from 4.6% last month and analyst expectations of 4.5%. Wages rose 0.3% in December, in line with expectations.
The disappointing jobs number sent U.S. equity futures higher, likely on the notion that it makes further Fed interest rate cuts more likely. Gold is up $30, and the dollar index is up slightly. Crude oil, which surged yesterday on mass protests in Iran, is up slightly this morning, but it will need to take out yesterday’s high to stage a real breakout and make a run at the $60 level.
World food prices fell for a fourth straight month in December, mainly due to dairy, meat and vegetable oil prices, the U.N.’s Food and Agriculture Organization says. The index slipped to 124.3 in December, down from 125.1 in November and down 2.3% from a year ago, Reuters reports. The dairy index fell 4.4% in December, meat was down 1.3%, and vegetable oils down 0.2%. However for 2025 as a while, the index was up 4.3%, with dairy up 13.2% and meat up 5.1%. The FAO’s cereals index meanwhile, down 1.7% in December, was up 4.9% for the year as a whole.
CORN: March futures are currently up 8 cents for the week, with most of the work by bulls being done on Monday, when the market surged and posted a bullish outside day higher. But this remains a sideways market, with the 20, and 40-day moving averages both flat over the past several days. The next notable move in the market will likely depend on what USDA says in its key reports on Monday. Strong export demand has provided the key underpinning for corn, but it has waned recently, and the prospect of high acreage this spring hangs over the market. South American weather should become a bigger market factor in the coming weeks as Brazil growers harvest soybeans and get the Safrinha crop planted. Any notable delays in the Brazil soybean harvest become supportive for corn as planting is also delayed. The other key South American question is whether dryness in southern Argentina spreads into key central growing areas.
South Korea has bought an estimated 204,000 metric tons of corn in an international tender seeking up to 210,000 tons on Friday, European traders told Reuters. The purchase is for April delivery and was expected to be sourced from optional origins.
Corn planting is now winding down in Argentina, and was 89.1% done as of Wednesday, The Buenos Aires Grains Exchange said yesterday. That is 3.2 points behind last year’s pace. The crop was rated 75% good/excellent, down 7 points from the prior week.
SOYBEANS: USDA reported a flash export sale this morning of 198,000 metric tons to “unknown destinations,” which the market will assume to be China. The market has had support this week from news that China bought at least 600,000 metric tons from the U.S., bringing its total to 9-to 10-million metric tons. The recent strength in beans is also tied in part to positioning ahead of Monday’s USDA report. But U.S. soybean exports overall still aren’t impressive, and favorable Brazil weather limits the upside.
China’s Sinograin will hold its first soybean auction of the year as it works to make room for U.S. shipments. In December it offered a total of 1.5 MMT in three different auctions, but prices and the amount purchased fell each time. Traders told Reuters they expected roughly 4 MMT to be released in the current cycle of auctions, which will offer soybeans from as far back as 2022. U.S. soybeans remain at a premium to Brazilian soybeans, and that seems unlikely to change given the large South American harvest set to pick up in the coming weeks.
Argentina soybean planting was 88.3% as of Wednesday, the Buenos Aires Grains Exchange said. It rated crop conditions 65% good/excellent, versus 68% a week earlier.
WHEAT: March Chicago futures are currently up more than a dime for the week. Dryness in the U.S. Plains has helped underpin the hard red winter market recently, but for now it is still concentrated mainly in Oklahoma and north Texas growing areas. Western Kansas and eastern Colorado are drought free. While the Plains get most of the attention, drought actually looks to be a bigger problem in many soft red winter areas. Parts of northwest Ohio are mired in an extreme drought, virtually all of Illinois is at least abnormally dry, and drought also covers virtually the entire South.
Globally, the weather pattern right now is “unsettled,” but there aren’t many bullish implications to that right now. A historic heat wave in Australia has pushed temperatures into triple digits and even above 110 degrees. However, the winter wheat harvest has been essentially wrapped up, leaving only some impact to spring/summer crops in some southeastern areas, World Weather Inc. says. In western Europe, an intense wind storm has been accompanied by ample rain that will provide drought relief in France. And in the Black Sea region, snow cover should protect against any significant damage from a bitter cold snap.
LIVESTOCK: Lean hog futures gained again Thursday, with February rising to its highest level in three sessions while June made a contract high. A close below Thursday’s low at $103.53 would now constitute a 5-wave sell signal. June futures have now reached to bottom of an old trading channel they occupied from May thru October. A close back inside of that channel would look technically strong. July and Aug. futures are also in fifth waves to the upside.
Lean hog futures may have difficulty maintaining strength due to further weakness in cash fundamentals. The composite pork cutout value fell $1.50 Thursday to $90.79 and the national avg. negotiated cash carcass price at midafternoon was $3.24 lower at $69.37.
Live cattle futures were also higher yesterday, as traders await more cash market activity. There was light trade yesterday in Nebraska at $232, steady with a week ago. Both cattle and hogs may be getting some support this week from the USDA’s new food pyramid, which places meat on the top line.
