Red Meat, Poultry and Dairy
In the November Supply/Demand report, USDA raised their 2020 red meat and poultry production estimate from last month, with increases seen in beef, pork and broiler production. Turkey and egg production estimates were both lowered.

The milk production forecasts for 2020 and 2021 were both raised from the previous month on stronger growth in milk per cow and a higher expected dairy cow inventory. The 2020 fat basis import forecast was raised on recent trade data and higher expected imports of cheese and butterfat products in the fourth quarter. This strength is expected to carry into 2021 supporting a higher 2021 fat basis import forecast. The fat basis export forecast for 2020 is raised on higher expected exports of cheese and butterfat; no change is made to the 2021 fat basis export forecast.

Cheese, nonfat dry milk, and whey prices forecast for 2020 are raised from last month on strength in demand. The butter price forecast for 2020 is reduced on current and expected continued weakness in prices. The 2020 Class III price forecast is raised on higher prices for cheese and whey. The Class IV price forecast is unchanged from last month as the higher NDM price offsets the lower butter price. The 2020 all-milk price forecast is raised to $18.25/cwt. 

For 2021, cheese, NDM, and whey price forecasts are raised on continued strength in demand. The butter price forecast is reduced on lower expected prices through the first part of the year. The 2021 Class III price forecast is raised on higher forecast prices for cheese and whey. The Class IV price forecast is reduced as the lowered butter price more than offsets the increase in NDM. The all-milk price forecast for 2021 is raised to $17.70/cwt. 

Cattle
Cattle futures have continued to rally, taking out multiple levels of resistance on the way up. February has found resistance for now at $115.50. Stronger choice beef prices are supportive as are stronger packer bids in many markets.  January feeders have also rallied this week, gapping higher on Monday. They have found resistance at $141.50 for the time being, though.

Hogs
Lean hog futures have recovered in recent days, supported by their discount to the CME cash index. December futures are struggling with resistance between $67 and $68. Deferred contracts have found support from expectations for lower production in 2021.

Corn
Corn futures were up sharply early in the week in reaction to larger-than-expected cuts to the production and ending stocks totals in the November production and supply/demand reports. USDA cut 215 million bushels off their production estimate, bringing the total to 14.5 bushels, down 1% from the previous report. Yields are projected to average 175.8 bushels/acre, down 2.6 bushels from the October report. Adding to the positive was an increase in the export projection of 325 million bushels. The net result of the reports was a projected U.S. stocks/use ratio for 20/21 of 11.5%, the lowest in 8 years. December corn set new highs in reaction to the report, finding resistance at $4.28.

Soybeans
Soybean futures exploded higher in reaction to the November reports. USDA now estimates the crop at 4.170 billion bushels. That was well below even the lowest trade estimates. The ending stocks estimate was lowered to only 190 million bushels, leaving the stocks to use ratio at 4.2%-the lowest since 2013-2014. While old crop contracts have moved to new contract highs, gains in new crop contracts have been tempered on expectations for larger soybean acreage in 2021 due to sharply higher prices.

Cotton
The cotton market was caught off-guard by the USDA reports, which showed few changes for cotton. USDA raised production by 40,000 bales while the industry was expecting a cut of nearly half a million bales. USDA left the ending stocks estimate at 7.2 million bales. They did raise the projected on-farm average price by 3 cent/lb. to 64 cents. December futures are trading in a mostly sideways pattern between support at 68 cents and resistance at 71 cents.

Rice
The USDA reports didn’t hold much news for rice, with the production report cut by a 7 pound/acre reduction in the average yield. The all-rice carryout forecast was increased by 1.8 million cwt, which resulted in an ending stocks estimate of 20.8 million cwt. from last year. USDA did increase their average on-farm price by 10 cents to $12.90. January is building support at $12.23, and longer-term support is found at the spike low of $12.05.