Corn futures are expected to open mixed on Monday. Corn futures prices traded mostly higher early in the overnight session, but ended up close to unchanged. The market was still benefittng from the news that China had bought more U.S. corn, but concerns that a budding U.S.-China dispute about the blind activist that escaped from house arrest put pressure on the crop markets, especially on soybeans. And the drop in soybean prices pulled corn and wheat futures down as well.
Soybeans are called 5 to 10 cents lower Monday. The new tension between the U.S. and China put pressure on soybean futures prices overnight. No one is sure how this diplomatic disagreement will play out, and at least some traders decided to move to the sidelines. Soybean futures in general are overbought and vulnerable to long-liquidation. Export demand is still strong and Monday’s Export Inspections report is expected to be bullish.
Wheat futures prices are 5 cents to 10 cents lower. Lower soybean prices put some pressure on wheat prices in overnight trade. But in contrast to the soybean market, wheat futures prices are generally oversold and we could see some price improvement if non-commercial traders decide to jump out of the market. The July Chicago contract has been trending higher since the middle of the month, Monday’s export Inspection report should be positive for the wheat market, and the Crop Progress report could show some crop damage from last week’s cold weather.
Cattle prices are forecast to open mixed on Monday. Cattle processing margins have improved recently and the number of cattle available for sale should be up this week. These factors could lead to higher cattle slaughter this week. Cash cattle sales were light last week so buyers may be short-bought for this week’s needs. Futures prices are well below cash prices, which provides some support to cattle futures, but nearby futures have been declining for the last 2 months.
Lean hog futures are expected to open steady to 50 cents lower. The hog market can’t seem to shake the weak cash market fundamentals. Cash hog prices fell again on Friday and are very close to the low for the year. Traders have been expecting a seasonal improvement in prices for weeks, but so far none has materialized. Processing margins remain very low and hog supplies are certainly high enough to satisfy demand. The market is oversold and we could see a bounce if traders decide to bail out, but that hasn’t happened yet.
Cotton futures are expected to open 50 to 100 points lower. The new tension between the U.S. and China is also affecting the cotton market. Cotton prices were up a little on Friday with news that China will soon issue new import quotas, hopefully allowing for additional U.S. sales before the end of the crop year. China accounts for more than half of U.S. sales so the overall U.S.-China relationship is a critical market factor. The July contract has been basically moving sideways since the middle of the month.