Corn futures prices are expected to open about 5 cents higher on Friday. Crop markets are really starting to take notice of the poor growing conditions that continue to evolve in South America, especially Argentina. Hot and dry weather is expected for key growing areas in Argentina for the next 10 days or more. Export sales data will be released this morning and traders expect new sales to be less than 0.5 million metric tons (about 17 million bushels). Shipments need to be above 30 million bushels to stay on pace to reach USDA’s export forecast for the year. Trade volume is expected to be very light on Friday.
Soybeans are called about 5 cents higher on Friday. The dry weather in Argentina is expected to give soybean prices a boost early on Friday after a couple of days of generally lower prices. However, the impact of the poor weather in Argentina is at least partially offset by rain in some key growing areas of Brazil over the weekend and early next week. Soybean prices could get some spillover support from the corn market on Friday.
Wheat prices are expected to open about 5 cents higher on Friday. The uptrend in wheat prices remains in place even with the slightly lower close on Thursday. Stronger prices for corn coupled with some weakness in the value of the dollar are expected to give wheat prices a modest boost early in the trading session. Prices in Chicago and in Kansas City were up 4 cents to 5 cents early Friday morning while spring wheat prices were about steady. Trade volume will be light on this final day of trading for 2011.
Live cattle futures prices are expected to open steady to mixed on Friday. Rising beef prices are providing some hope for higher cash cattle and cattle futures prices on Friday. However, it doesn’t look like there will be much activity in the cash cattle trade with a pretty wide gap between buyers and sellers. With the light trade in the cash market again this week there will be a large carryover of market ready cattle into early January. Some modest weakness in the value of the dollar should provide some support to cattle futures prices on Friday. Feeder cattle futures prices were essentially unchanged in overnight trading.
Lean hog futures are expected to open about 20 cents higher on Friday. Cash hog prices were a little higher on Thursday which should help to stop the sharp drop in hog futures prices that occurred on Thursday. Cash prices usually begin to improve once we start the new year and the December Hogs and Pigs report indicated that hog slaughter early in 2012 will be just a little above year earlier levels. However, by February we should start seeing year-over-year increases near 2 percent and beef production will still be relatively high at that point. But later in the year beef production will decline and that will help to support hog prices even if pork production is up.
Cotton prices were trading nearly unchanged early Friday after posting solid gains on Thursday. The July contract closed above 90 cents per pound on Thursday for the first time since Dec. 8. Cotton contracts for the 2012 crop were generally lower on Thursday as traders worry about the strength of the global economy and long-term demand for cotton. Some traders expect significant declines in area in China in 2012 and U.S. acreage is also expected to decline. Some say cotton area in China could be down by as much as 20 percent from the 2011 level, but a smaller cut is more likely. But even with the potential for less acreage in 2012, traders aren’t willing to buy into tight supplies next season, at least not yet.