Monday morning USDA news indicated that private exporters sold 102,2000 tonnes of corn for 2013 delivery over the weekend probably played a sizeable role in the moderate gains posted by the yellow grain market in early-week trading. The reaction may have been exaggerated by ideas that recent losses had been overdone by year-end position liquidation and pessimism about export prospects. This latest report may be seen as signaling that prices have fallen far enough to trigger fresh interest in U.S. product. On the other hand, the result of the weekly Export Inspections report stated the latest total below forecasts, thereby suggesting the situation remains precarious. March corn had risen 4 1/4 cents to $6.84 1/2, by late morning, while December gained 3 1/2 to $5.75 1/4 per bushel.
Pessimism about prospects for U.S. soybean exports has recently weighed rather heavily upon the grain and soy complexes, with the losses suffered by soybean futures last week ultimately being exaggerated by an increased 2012 production estimate from a private firm last Friday. The annual production total and expected ending-2013 stockpiles will almost surely be a major topic of conversation and CBOT trading this week, since the USDA will release its latest estimates Friday morning (1/11). This could make for choppy trading as those in the industry try to anticipate the results and position themselves accordingly. In the absence of significant news, futures seem likely to rebound from recent losses somewhat, since the grain and soy markets are generally seen as being technically oversold at this juncture. After having surged rather substantially in early trading, March beans were only 1 1/4 cents higher, at $13.68 1/4 around mid-session Monday, while March soyoil had climbed 0.10 cents to 49.63 cents/pound and March meal was unchanged at $399.0/ton.
The weekly Export Inspections report proved more favorable to the short-term wheat outlook than for corn or soybeans, since the result, at 13,400 tonnes topped pre-report forecasts in the 9,000-12,000 tonne range. In addition, the nearby wheat contracts seem more technically oversold than do their CBOT counterparts. The American market is also viewed as being cheap relative to its international counterparts, which might spark accelerating exports during the days and weeks just ahead. Still, uncertainty about the results of the Friday reports, particularly since they will apply to both new and old crop wheat production, could greatly affect wheat futures during the days ahead. March CBOT wheat climbed 4 3/4 cents to $7.52/bushel by late Monday morning; March KCBT wheat was up 4 cents to $8.08 1/2 and March MGE futures surged 4 1/4 cents to $8.45 1/4 per bushel.
Despite likely industry disappointment with cash cattle trading last Friday, when prices ranged between 128.00 and 128.50 cents/pound, CME traders pushed nearby futures slightly higher Monday morning. The fact that packers got few takers at the higher levels may have encouraged some, while others may be expecting a wholesale price advance to push country cattle prices higher as well. That is, prospects for moderately improved beef demand and seasonally slowing production could push the wholesale market significantly higher during the coming weeks, which in turn might boost fed cattle prices substantially. On the other hand, nearby futures are already anticipating considerable first-quarter strength, so continued CME gains are in no way guaranteed. February cattle rose 0.12 cents to 133.07 cents/pound just before the lunch hour, while April added 0.25 cents to 137.02 cents/pound.
Lean hog futures are also trading at substantial premiums to cash equivalent values as the industry anticipates a seasonal advance through mid-February. That is, pork demand traditionally improves after the first of the year, while hog slaughter and pork production decline from early-winter highs. The mixed nature of Monday morning trading suggests the industry is wondering whether the implicitly bullish forecasts being made by nearby futures are justified. Much may depend upon the strength, or lack thereof, exhibited by fed cattle prices during the coming weeks. The technical situation also seems rather clouded. February hogs advanced 0.37 cents to 86.45 cents/pound around mid-session, while the June contract was just 0.20 cents higher at 98.95.
After trading weakly in Sunday night-Monday morning activity, cotton futures rebounded moderately in late morning exchanges. It would be easy to assume concurrent gains in the grain and soybean pits supported white fiber values, since cotton traditionally competes with soybeans for acreage across the Southeast each spring. The simple fact that the nearby March future rebounded substantially from major chart support associated with its 40-day moving average Friday may also have spurred fresh buying today. March futures edged 0.15 cents higher, to 75.20 cents/pound in late-morning activity, while December had slipped 0.05 cents to 79.05 cents/pound.