Grains see early pressure with cattle and hogs trading two-sided.
Rich Nelson with Allendale, Inc. says grain markets are seeing early pressure with a rebound in the U.S. dollar index back near recent highs, but also watching South American weather and ahead of USDA reports on Friday.
Dryness persists in Argentina and Southern Brazil with a bit better chance for rain in the 11-15 day forecast, although Nelson says it might be a bit early for the market to be fully trading that weather.
Estimates are out for the USDA reports on Friday which include the January WASDE, with expectations for a slight contraction in corn and soybean yields says Nelson.
Corn yield is estimated at 182.7 bu. and soybeans at 51.6 bu. with corn production down 50 million bu. to 15.09 billion bu. and soybean production down 10 million bu. to 4.45 billion bu.
Demand could be raised for corn according to Nelson but it’s not likely for soybeans or wheat.
Ending stocks estimates for corn at 1.675 billion bu. implies a nearly 65 million bu. drop and soybean carryover is projected at 457 million bu. down 13 million.
The market will also be watching the South American corn and soybean production estimates but Nelson says it might be too early for USDA to make major changes.
Even at present levels the world is looking at record soybean stocks and stocks-to -use ratios.
USDA will release Winter Wheat Seedings but the estimates are very close to last year for every class of wheat and 33.5 million acres for all winter wheat.
The trade will be watching global wheat production figures with some issues in Russia and other areas.
Quarterly stocks will also be released with estimates at 12.15 billion bu. for corn, 3.23 billion bu. for soybeans and 1.57 billion bu. for wheat.
After the reports, Nelson thinks the market will turn its attention to trade concerns surrounding the trade and tariff policies of the new Trump Administration.
Cattle futures started off a bit weaker on profit taking after hitting fresh highs in live and feeder cattle contracts on Tuesday.
However, the market continues to be resilient but the big question is how long will funds continue to buy, especially with the reopening of the border to Mexican cattle being reportedly targeted for the week of January 20?
Lean hog futures were mixed early but Nelson says that market is likely to see more fund liquidation especially as cash and cutouts have softened.
