Talk about diminished ethanol demand undercut corn prices again overnight. The EPA is reportedly ready to rule that the blend wall on U.S. gasoline consumption will act as a limit on future ethanol demand, which holds bearish connotations for the long-term corn outlook. As one would expect, corn futures have slipped in response. December corn futures dipped 4.0 cents to $4.3425/bushel Thursday night, while May lost 4.0 cents to $4.555.
The soy complex also moved mostly lower Thursday night. The talk of an EPA cut to the ethanol mandate suggests the drive toward renewable fuels is waning, which could be a negative factor for the soyoil outlook. Thus, it wasn’t terribly surprising to see soybean oil futures follow the Asian veg oil markets lower last night and drag bean prices downward as well. November soybeans sank 5.5 cents to $12.825/bushel around dawn Friday, and December soyoil tumbled 0.57 cents to 40.65 cents/pound, but December soymeal gained $0.2 to $409.8/ton.
Wheat futures again suffered from spillover corn weakness. The late corn price decline is apparently weighing upon wheat futures as well. Thursday’s Egyptian rejection of offers on a major wheat tender also suggested global prices are currently too high. December CBOT wheat slipped 1.5 cents to $6.84/bushel early Friday morning, while December KCBT wheat slid 1.0 cent to $7.545, and December MGE futures sagged 0.25 cent to $7.5075.
Cattle futures are seemingly following the equity markets. The dearth of USDA news remains a major handicap to livestock futures trading and may be increasing the cattle market’s sensitivity to stock market moves (since those hold implications for future red meat demand). For example, cattle futures rallied modestly yesterday and continued rising overnight. December cattle futures rose 0.12 cents to 132.30 cents/pound in early Friday morning action, while April edged up 0.05 to 135.00. Meanwhile, November feeder cattle surged 0.60 cents to 168.52 cents/pound, and January ran up 0.27 to 168.10.
The hog market was mixed in early Friday trading. Stock index gains appeared to support nearby hog futures as well Thursday night due to the underlying implications for pork demand. However, late talk that hog supplies are surging may be causing the swine industry to rethink its optimism about the 2014 outlook. December hog futures inched up 0.07 cents to 86.72 cents/pound around sunrise Friday, whereas April declined 0.07 cents to 89.97.
Renewed equity strength seems to boosting the cotton market. In its monthly cotton report, the ICAC increased its forecast for 2013/14 global cotton carryout 2.0 million to 20.3 million tonnes. That is actually quite close to the USDA’s most recent estimate, so it had little market impact. Actually, cotton traders apparently bought the market in reaction to the current equity rally, which implies improved apparel demand down the road. December cotton rallied 0.56 cents to 83.73 cents/pound soon after the New York sunrise Friday, while March advanced 0.69 to 84.70.