Corn futures look set to begin this week strongly after having fallen in response to the USDA WASDE report last Friday. Old crop tightness seemed to boost the expiring May future, while the deferred contracts rose only slightly. A forecast from Chinese government officials indicating growing corn imports despite a likely increase in domestic production probably supported Chicago prices. July corn gained 2.75 cents to $6.39/bushel as the sun rose Monday, while December added 1.0 cents to $5.305.
The extreme tightness of the domestic soy situation seemed to support old crop soybean and product prices over the weekend, whereas promises of much more liquid new crop conditions apparently undercut new crop prices. Weekend forecasts concerning Chinese grain prospects did not include soy, although firm palm oil prices seemingly did little to support soyoil futures. July soybean futures rose 3.0 cents to $14.02/bushel as electronic trading resumed early Monday morning, but July soyoil climbed 0.04 cents to 49.27 cents/pound, while July soybean meal inched up $0.9 to $407.7/ton.
There seemed to be little significant wheat news over the weekend, so it was not terribly surprising to see the markets trading mixed on Monday morning. Chicago futures rose slightly, while Kansas City was mixed and Minneapolis a bit lower. Weather developments will probably continue playing a big role in wheat pricing during the days and weeks ahead. July CBOT wheat futures advanced 1.5 cents to $7.0575/bushel early Monday morning, while July KCBT wheat edged up 0.5 cents to $7.5925, and July MGE futures were unchanged at $8.0875.
News of surprising cash market weakness undercut cattle futures despite record-high beef prices last week. Traders obviously expect much more spot market slippage over the next few weeks, which largely explains the CME weakness seen last Friday. Early action this week probably depends upon cash expectations and wholesale market developments. Persistent beef gains could spark a significant CME bounce. June cattle closed 0.10 cents lower at 120.45 cents/pound last Friday afternoon, while December bounced 0.37 cents to 125.67. Meanwhile, feeder cattle futures surged in response to the prospect of lower feed costs later this year. August jumped 0.65 cents to 146.62 cents/pound, while November moved 0.92 cents higher to 151.92.
Chicago hog prices remained under pressure last Friday despite recent cash and wholesale strength. The futures weakness almost surely reflects the growing belief that the early-spring hog/pork rally has run its course. As with cattle futures, the swine market also responded little to the USDA reports. Conversely, late firmness in summer futures suggested a technical bounce could occur this week. June hog futures slid 0.32 cents to 90.25 cents/pound, while December futures lost 0.60 cents to 77.05.
As expected, the USDA forecast increased global cotton stocks for 2012/13 and 2013/14 last Friday, but they also predicted that the bulk of those inventories would end up in China, where the government seems very likely to continue its stockpiling program. However, the sheer size of the anticipated total at the end of the 2013/14 crop year seemed to exaggerate futures weakness seen that morning and again over the weekend. July cotton fell 1.21 cents to 85.27 cents/pound in early Monday morning electronic trading, while December tumbled 1.16 cents to 84.66.