China news undercut corn futures Thursday morning. Large corn stockpiles in the Northern Hemisphere are a dominant factor at this point, especially with the latest weather forecasts seeming quite favorable to South American production. Thus, news that China rejected at least one shipment of U.S. distillers grains over contamination with an unapproved GMO yesterday sparked CBOT selling. March corn futures fell 6.25 cents to $4.2825/bushel Thursday morning, while May dropped 6.25 cents to $4.365.
Improved South American weather is weighing on the soy complex. Generally favorable Brazilian conditions and forecasts for Argentine rainfall later this week are depressing soybean and product prices. Conversely, the surprisingly tight U.S. situation could limit downside price potential. January soybeans dove 6.75 cents to $13.27/bushel around midsession Thursday, while January soyoil slipped 0.11 cents to 38.99 cents/pound, and January soymeal lost $5.7 to $441.7/ton.
Wheat markets are continuing their late-year decline. The huge global stockpile and positive South American production prospects are apparently dragging wheat prices downward. Traders are worry that U.S. wheat isn’t very competitive in the international marketplace. March CBOT wheat futures tumbled 4.25 cents to $6.02/bushel at midday Thursday, while March KCBT wheat futures slid 5.25 cents to $6.4125, and MWE futures dipped 3.25 to $6.3725.
Cattle futures seem to be expecting firm cash trading. Although talk of weak wholesale demand and packer cutbacks appear to be the main factors affecting the cattle market at this point, this morning’s February futures firmness, as well as the modest premium built into expiring December futures, suggest CME traders are slightly optimistic about short-term cash prospects. February cattle futures bounced 0.20 cents to 133.90 cents/pound just before lunchtime Thursday, while April futures skidded 0.07 cents to 134.70. Meanwhile, January feeder cattle futures rallied 0.47 cents to 166.72 cents/pound, and March rose 0.55 to 167.20.
Hog traders seem less optimistic about short-term cash prospects. Although wholesale prices rose slightly Tuesday, hog traders appear rather pessimistic about likely cash market developments over the short run. That is, they seemingly think year-end cash weakness will persist and further delay the long-anticipated winter rally. We should probably expect very limited action prior to tomorrow’s release of the quarterly USDA Hogs & Pigs report. February hog futures slumped 0.45 cents to 85.42 cents/pound in late Thursday morning action, while June stumbled 0.45 to 99.95.
Mid-week news is apparently supporting cotton futures. After dropping sharply on Monday, cotton futures rebounded strongly on Christmas Eve. The main driver of the bounce was news that a thunderstorm had damaged a Memphis warehouse containing certificated cotton stocks, thereby rendering them undeliverable against ICE futures. Favorable U.S. economic news and actions taken by the agency building China’s massive stockpile also seemed to offer persistent support for the ICE market. March cotton edged up 0.09 cents to 83.27 cents/pound around midday (EST) Thursday, while July cotton added 0.15 cent to 82.86.