Ag Market Commentary

Corn futures are fractionally lower after settling the Monday session with most contracts 2 to 3 1/4 cents in the red. Preliminary open interest was up 5,238 contracts, indicating some net new selling interest. The USDA reported a private export sale of 130,000 MT of corn to South Korea for 17/18 delivery through their daily reporting system Monday morning. The Export Inspections report showed 1.074 MMT in corn shipments during the week ending 2/1. That was 6.2% larger than the week prior but 4.4% lower than the same week in 2017. Ahead of Thursday’s monthly USDA report, analysts are expecting to see a 9 mbu reduction in US corn ending stocks to 2.468 bbu.

Soybean futures are 3 to 4 cents higher this morning. They saw a 6 to 9 cent drop in most contracts on Monday, with pressure from forecasts for improved rains in Argentina and a melt down on Wall Street. Meal futures were down $4.40/ton, with nearby soy oil 1 point lower. A private export sale of 198,600 MT of soybeans to Unknown Destinations, was reported by the USDA Monday morning under the daily system. Monday’s USDA inspections report showed exports of 1.304 MMT of soybeans for the week ending Feb 1. That was 15.33% above last week but 20.98% behind this week last year. The average trade guess for 2017/18 soybean ending stocks in Thursday’s USDA Supply and Demand report is 487.8 mbu, 17.8 mbu larger than January. Traders are expecting another cut in export projections.

Wheat futures are trading steady to 1 cent lower in the CHI and KC contracts this morning. MPLS spring wheat is trading a penny higher. They were 1 to 2 cents lower in most KC and MPLS front months yesterday, while the CBT was down 6 to 7 cents. CBT preliminary open interest dropped almost 5000 contracts, indicative of long liquidation focused in the March contract. All wheat export inspections for the week that ended on 2/1 were 428,557 MT. That is down 26.32% from the previous week and lags the same week last year by 37.46%. Analysts are expecting 17/18 US ending stocks to be steady in the February WASDE at 987.8 mbu, down just 1.2 mbu. Iraq is seeking 50,000 MT of wheat from Australia, Canada, or the US with the tender closing Feb 11. In their weekend tender, Saudi Arabia purchased 739,000 MT of wheat with origins of EU, North and South America and Australia.

Live cattle futures settled with losses of 45 cents to $1.15 on Monday. Feeder cattle futures were 75 cents to $1.45 lower. The CME feeder cattle index was up 9 cents on February 1 at $148.12. Wholesale boxed beef values were higher on Monday afternoon. Choice boxes were up 33 cents at $209.43, with Select boxes 71 cents higher at $204.16. Estimated FI cattle slaughter was 114,000 head on Monday. That was down 4,000 from the previous week but 5,000 head larger than the same Monday last year. Most cash sales were reported at $126 last week. Show list collection appears to have been the main activity today.

Lean hog futures ended the Monday session with most contracts lower, as nearby Feb was up 62.5 cents. The CME Lean Hog Index was up 23 cents on February 1 at $74.10. The USDA pork carcass cutout value was $1.51 lower at $80.12 in the Monday PM report. Most cuts were higher, however the ham was down $1.63 and the belly $8.41 lower. The national base hog weighted average price was down 5 cents to $72.63. The USDA estimated FI hog slaughter at 466,000 on Monday. That is even with the previous week, and 29,000 head more than the same Monday last year.

Cotton futures are trading 24 to 30 points lower this morning. They finished Monday with 11 to 73 point losses in most contracts. Pressure was again from the US dollar, up 445 points on the day as well as a global sell off in equities. One CNBC headline put the global loss in paper value at $4 trillion. That said, there is now a lot of cash sitting on the sidelines looking for someplace to go. The International Cotton Advisory Committee currently estimates that the world cotton production will total 25.51 MMT in 17/18, 2.53 MMT larger than 16/17. Ending stocks are only estimated to increase 0.14 MMT to 18.88 MMT. The USDA Adjusted World Price or AWP is 71.35 cents/lb, through Thursday. The Cotlook A index on February 1 was 89.05 cents/lb, up 120 points from the previous day.

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