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Howdy market watchers. Let it snow indeed. Well, it looks like all the meteorologists agree this time … it’s going to be a snowmageddon starting today.

Temps have been dropping and the snow has been falling for the better part of this past week, and we are in for it in the week ahead. It has been a long time since we’ve been this cold for this long. We always say in the summer that we need a hard freeze to better control the bugs, but now that we’re in the midst of it all, we’re hoping that it’s not as bad as they’re forecasting. It sounds like we’ll be working from home come Monday while the markets are closed anyway in observance of President’s Day, with trade resuming Monday night at 5 p.m. for energies and 7 p.m. for ags.

It’s been a week of volatility in markets with more two-sided action that we’ve seen recently. USDA’s monthly WASDE and Crop Production report was released Tuesday with a few surprises, but moreso a “buy the rumor, sell the fact” type action. The precipitous selloff didn’t start until Wednesday’s day session when front-month beans dropped more than 50 cents, with corn and wheat down 25 cents. By week’s end, corn and beans traded back to the 20-day moving averages, while KC new crop July wheat settled just above $6.25 down from Jan. 15’s high at $6.61½. While long liquidation and profit taking pressured markets this week, managed money as of Tuesday’s CFTC cutoff saw longs extend length in corn to 358,807 versus the record long of 429,189, while beans reached 171,770 versus a record long at 253,889. Managed funds also increased longs in KC wheat slightly to 60,092 versus the record at 73,111. The closer these longs get to the record, the more vulnerable contracts become to selling pressure with the right catalysts.

Despite the current chop in ag commodities, wheat and beans continue to trade in a range from highs set in mid-January, while corn has managed to make new highs with every move since then. Tuesday’s surprise from the USDA came in the form of higher U.S. ending stocks for corn in 2020-21 clocking in at 1.502 billion bushels versus average trade estimates at 1.382 billion although below last month’s number at 1.552 billion bushels. Brazil and Argentina’s corn crop also was slightly above trade guesses, but unchanged from last month as were the rest of the South American forecasts for corn as well as soybeans. Export reports have remained firm with the USDA finally adjusting China’s corn imports upward to 24 million tons from 17.5 million tons last month and 7.6 million tons last year. This is now more in line with where the rest of the trade already has decided China corn imports are/will soon be. At these levels, China has become the world’s largest corn importer, followed by Mexico and Japan.

The USDA also increased China’s wheat imports for the sixth consecutive month to 10 million tons. If realized, this would be China’s highest level of wheat imports in 25 years. High corn prices in China and limited trade partners other than the Ukraine and the U.S., demand for wheat also is being driven by the spread for use as a feed ingredient.

This past week has been Chinese New Year for all of Asia, with the Year of the Ox starting officially on Friday. Need something to ponder this weekend? Search for your Zodiac year by year of birth and see what the Year of the Ox holds for your animal … instincts. You’re welcome.

President Joe Biden finally got around to calling President Xi this week, the delay intentional, where issues of climate change, human rights and Taiwan were discussed or rather “said,” as was expected especially under a Democratic administration. Long story short, both sides said what they needed to say for local constituencies with no discussion to speak of. There is no doubt our foreign foes will test the new chief executive, as per usual, to gauge the new leadership’s appetite for conflict. The world is watching as are our fellow citizens, but suffice it to say for those forecasting that all of Obama’s policies are back with slight modifications. For producers and speculators this next week, winter weather will be in focus for wheat and cattle markets. Much of the northern hemisphere has cold temps in store from the U.S. to Europe to Russia. Winterkill risk in 15% of Ukraine is possible by Tuesday of next week with cold Siberian air pushing south before adequate snow cover, while 25% of the Ukraine, in the east, as well as the Russian wheat belt, in the south, will be threatened. Similar numbers exist here in the US although snow cover will help insulate in several areas. A close above the $6.30 area on March KC wheat could suggest more up, but watch corn and beans as wheat is the weakest of the complex and it will be difficult to muster much up in the presence of weaker corn.

The cattle market has also been trading weather this week as well as volatility in grains. Managed funds are long the Live and getting longer with 86,610 net longs as of Tuesday versus a record 154,550. Fats have continued to push on the futures with glacial gains in the cash that traded around $114-115 this week. April futures made new highs Friday at $125.825 before loosing some steam and closing at $125.175. The trend, as of now, remains higher. Feeder cattle are showing more vulnerability to higher feed. Managed funds are nearly flat with a slight long bias at 1,334 versus record net long at 21,190. Winter storms in feedlot states may support prices in the next week or two, but the $146-$147 area looks to be key resistance for March feeders and so those planning to sell then to harvest a wheat crop should be looking to get protection at those levels or on the way up on rallies as we know what happens when a flood of feeders head to the sale at the same time. If wheat prices take off, expect more anxious sellers.

And by the way, for my investor followers, watch Bitcoin and other cryptos and Tesla here. Call if interested in more info. If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss strategies to pursue your objectives. Self-trading accounts are also available. It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.

Remember, I am on-site at the Enid Livestock Market on Thursday, sale day. Wishing everyone a successful trading week.

Sidwell is a Series 3 licensed commodity futures broker and principal of Sidwell Strategies. He can be reached at (580) 232-2272 or at [email protected]. Futures and options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at http://www.sidwellstrategies.com/disclaimer.

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