Ag Market Commentary

Corn futures are trading 1 to 2 cents higher this morning. They settled Friday with most contracts 2 to 3 cents lower in the face of another record corn yield from USDA. NASS put the final yield for the 2017 crop at a record 176.6 bpa. Due to a drop in the harvested acres the production rise was limited. The world ending stocks were increased to 206.57 MMT thanks to larger 16/17 carryout and lower global feed usage. US December 1 corn stocks totaled 12.516 bbu, above expectations due to the larger crop and 130 mbu larger compared to last year. ECB stocks rose 1.83% to 3.32 bbu, with the WCB up 1.68% to 6.25 billion bushels. South Korea purchased 70,000 MT of corn on Friday, with the US the likely origin.

Soybean futures are currently 5 to 6 cents higher after seeing sharp gains of 10 to 12 cents in most contracts on Friday. Meal futures were up 20 cents/ton on Friday, with nearby soy oil 4 points lower. They had the same pattern overnight. US ending stocks for the 17/18 soybean crop were increased 25 mbu to 470 mbu Friday morning. Lower production and larger crush estimates helped to offset a 65 mbu reduction in expected exports. The Quarterly Stocks report indicated December 1 soybean stocks were 3.157 bbu, up 259 mbu from a year ago and a shade under expectations. The production increase in Brazil was nearly offset by smaller US and Argentina crops to bring the world ending stocks number slightly higher to 98.57 MMT.

Wheat futures are mostly 2 to 3 cents lower in the Chicago SRW contract this morning, with KC HRW 4 cents lower. MPLS spring wheat is fractionally higher. All three posted steep losses on Friday, pressured by larger than expected US winter wheat acreage and larger 17/18 carryout. The Winter Wheat Seedings report showed 32.6108 million acres of winter wheat was planted last fall, a much smaller decline than traders had anticipated. Stocks of wheat on December 1 totaled 1.874 bbu, down 203 mbu from last year and in line with expectations. US old crop ending stocks were shown at 989 mbu, as imports were raised 5 million bushels and feed usage was trimmed. Carryout from HRS and HRW took most of the hit. World ending stocks totaled 268.02 MMT, down 0.4 MMT from December. A reduction in Australia’s carryover by almost 3 MMT offset a 2 MMT increase in Russian production (now 85 MMT).

Live cattle futures closed 25 to 92.5 higher on Friday. Feeder cattle futures were a dime to $1.275 higher. The CME feeder cattle index on January 11 was $146.80, down $2.01 from the previous day. Wholesale boxed beef values were lower on Friday afternoon. Choice boxes averaged 84 cents lower at $208.23, with Select boxes $1.31 per cwt at $201.64. Estimated weekly FI cattle slaughter is 611,000 head through Saturday. That is 2,000 head more than the same week last year. Quarterly beef production was given a 130 million pound downward adjustment for the fourth quarter of 2017 to 6.74 billion pounds. Total production for 2017 was shown at 26.175 billion pounds, with USDA estimating 2018 up 170 million at 27.760 billion pounds.

Lean hog futures were mixed on Friday, with most front months 12.5 to 60 cents higher and a few deferred contracts lower. The CME Lean Hog Index was up $1.18 on January 10 at $68.46. The USDA pork carcass cutout value was up 77 cents at $79.81 in the Friday afternoon report. The national base hog weighted average price was down 45 cents to $69.45. The USDA week to date FI hog slaughter is estimated at 2,450,000 head through Saturday. Pork production for 2017 was totaled at 25.585 billion pounds in this morning’s USDA supply and demand table. That was moved by a 25 million pound increase in the fourth quarter. Production for 2018 is projected at 26.960 billion pounds, up 45 million pounds from the previous report.

Cotton futures are trading 21 to 38 points lower this morning. They ended the busy Friday session with most contracts lower, as traders were taking profits ahead of the long weekend. The US dollar was down 950 points on Friday but is firmer this morning. US ending stocks were trimmed 100,000 bales to 5.7 million bales on lighter production. World stocks were reduced slightly to 87.79 million bales. Increased Chinese production by 1.4 million bales trimmed their projected import volume 300,000 bales. The Cotton Ginnings report indicated 16.153 million bales were ginned as of Jan 1, a 2.149 million bale jump from Dec 15 and 16.6% larger than last year. The USDA Adjusted World Price (AWP) was increased 35 points to 71.21 cents/lb on Thursday. The Cotlook A Index for January 11 was 130 points higher than the previous day at 90.35 cents/lb.

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