Pre-opening calls were for just a few cents gain, but corn futures charts gapped higher on the open Tuesday and closed with double-digit gains near the highs of the day, not even attempting to close the opening gap. Once again, the key driver was continued stress on Argentina’s key corn producing regions with no end in sight for the next couple of weeks. To a lesser extent, there’s also continued concern about dry weather stress to portions of Brazil’s corn region as well. Trading volume was relatively light today, however, given that this is a holiday week and it’s not uncommon for even low volume trade to result in significant price movement when it’s a lop-sided split between those wanting to buy and those willing to sell; especially when new farmer selling is almost non-existent with producers celebrating with family and keeping grain bin doors locked. March futures closed 14 cents higher at $6.33 and new crop December 13 ¾ higher at $6.41 ¾.
Called to open just 5-7 cents higher on Tuesday, soybean futures gapped nearly 10 cents higher and never looked back. They continued climbing to strong double-digit gains and closed near the highs of the day and the highest in more than a month. As in corn, the key driving force are daily declines in yield potential now being suffered in Argentina under relentless heat and dryness with no rain relief in sight for the next 10-14 days down there. Beans in southern Brazil are also under stress, though not as bad as in Argentina. Outside markets were somewhat supportive, with the dollar weak and the DJIA and crude oil prices stronger. Gold, however, closed lower taking some of the shine off the outside market influences. January beans closed are 36 ¾ higher at $11.99 ¾ and new crop November beans closed 27 cents higher at $12.06.
Riding the coattails of the jump in corn prices, wheat prices closed double-digits higher on Tuesday, taking out last month’s highs for an impressive technical showing on the charts. Short-covering by Trading Funds who need to close out year-end positions with a huge net short position in wheat was another element of today’s further climb in wheat. And as in all the trading pits, however, volume was light in a holiday-shortened week and even a modest imbalance between buyers and sellers in thin trade can produce exaggerated price swings. But rising corn prices are a bona-fide fundamental positive for wheat from the simple fact that wheat is competitive with corn as a feedgrain and for that reason, tends to trade in tandem with corn in the absence of any new fundamental news of its own. At the close, CBOT March was 21 ¾ higher at $6.43 3/4, KCBT March wheat up 20 3/4 at $6.95 ¾; and MGE March up 18 ½ at $8.63.
Live cattle futures closed sharply lower Tuesday, largely on profit-taking and light volume of trade in this holiday week. Even though cash cattle prices posted solid gains of $4 to $8 last week, boxed beef prices for packers have not kept up and unless they see retail demand pick up, they’ll be reluctant to bid cash cattle much higher and traders know it. That triggered selling pressure today. Retail demand for beef typically rebounds after the holidays which may be enough to push processing margins back into positive territory. But after bidding up cash cattle so sharply last week without commensurate gains in the boxed beef output, traders are moving to the sidelines until they see if that happens. At the close, February cattle were $1.025 lower at $123.30, while April cattle closed $1.25 lower at $126.60.
Hog futures closed slightly lower on Tuesday. USDA released the quarterly Hogs and Pigs report on Friday and the market hog inventory was a little larger than expected. But the report was released while hog futures were trading and future prices actually moved higher after the new information hit the market. Demand for pork has been lackluster in recent weeks and cash hog prices have declined. But hog numbers should decline seasonally as we move into January which should tend to support cash hog prices which in turn should provide some support to hog futures prices. February futures closed just 2.5 cents per cwt. lower at $85.82 ½, while April closed 25 cents lower at $88.72 ½ and May futures 5 cents lower at $95.05 per cwt.
Cotton futures closed higher Tuesday. Gains in outside markets helped. The DJIA and crude oil closed higher and the dollar was slightly weaker. The only negative was a lower close for gold futures. Nonetheless, we can’t get around the fact that the cotton market is characterized by weak demand and rising stocks. It will be hard to generate a substantial rebound in prices before spring. At the close March cotton was 67 cents higher at $87.91 per cwt; new crop December 60 cents higher at $86.86.