Corn futures slips slightly on Thursday morning

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The recent decline in corn futures accelerated Wednesday after a Memphis-based consulting company boosted its estimate of next year’s corn plantings to 99 million acres, thereby implying a huge domestic crop if normal weather conditions hold next year. The resulting drop sparked a nearby futures test of chart support just above the psychologically important $7.00/bushel level. Indeed, the nearby March future fell below that point in overnight trading, thereby seeming to open the door to a test of the chart gap (i.e. $6.83 1/2 to $6.90 1/2 basis March) created as prices repeatedly leapt upward around Independence Day. March corn looks set to begin the pit session 5 1/4 cents lower at to $6.97 ¼ per bushel, while the December 2013 contract fell 3 cents to $6.10 1/2.

Having China cancel previously contracted purchases of 300,000 tonnes of soybeans Tuesday morning obviously did a number on CBOT soybean prices later that day and again on Wednesday despite news that a Memphis-based consulting company had lowered its forecast of 2013 U.S. soybean acreage by about 1.1 million acres. CBOT traders seemingly concentrated on the fact that the private forecast would still set a record for domestic soy plantings. The market kept sliding in Thursday morning electronic trading, thereby raising the possibility that January futures will soon test the $14.00/bushel area. January beans fell 8 3/4 cents to $14.28 1/4, while January soyoil slipped 0.22 to 48.19 cents/pound and January meal added $3.4, to $437.2/ton, to its recent losses.

Tuesday night talk that Egypt would enter the international wheat markets as a major buyer was borne out by midmorning Wednesday, with that country’s purchases supporting wheat futures very well in early trading. However, bulls proved unable to sustain the move despite news that a Memphis-based consulting company reduced its estimate of recent winter wheat plantings by approximately 300,000 acres. Overnight news that Ukraine will allow exports of an additional 300,000 tonnes, along with a report indicating a 7% annual increase in German winter wheat plantings seemed to maintain the downward pressure in trading early this morning. March CBOT wheat dove 13 cents to $7.92 3/4 per bushel, while March KCBT fell 8 1/2 cents to $8.49 1/2 and March MGE futures dropped 3 1/2 cents to $8.92/bushel.

Live cattle futures surged once again Wednesday in likely response to wire service surveys published ahead of the Friday afternoon (12/21) USDA Cattle on Feed report; it is expected to state November feedlot placements approximately 9% below the comparable 2011 rate and the December 1 U.S. feedlot population at just 93.4% of last year. The latter figure would represent a 10-year low. These forecasts reemphasize the growing tightness of the domestic fed cattle supply. Moreover, market-ready supplies may diminish even farther in the wake of the winter storm now crossing the Central Plains and another expected by the middle of next week. And while beef prices have been flat to mixed lately and packer margins are deep in the red, recent events certainly seem to favor bullish interests. February live cattle futures rose 0.02 cents to 134.37 cents/pound overnight, while April slipped 0.05 to 137.90.

News of cash hog strength and spillover support from the cattle market seemed to boost CME swine values Wednesday. Bulls may also be thinking the snowstorm looming over Iowa and surrounding areas will disrupt transportation and at least partially support prices over the short run. The complex proved rather mixed in early-Thursday trading, which may have reflected Wednesday afternoon reports of cash firmness and wholesale losses. Bullish traders also appear to have the upper hand in the hog pit, with many in the industry expecting a vigorous seasonal advance in the wake of seasonal year-end weakness. February hogs inched 0.05 cents higher to 86.62 cents/pound overnight, whereas June futures dipped 0.40 cents higher to 100.20.


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