Corn futures moved decidedly lower late last week in response to Thursday’s poor export sales data. Traders worry that demand is suffering due to greatly elevated prices. Prices continued their decline in Sunday night-Monday morning trading, with concerns about diminished export buying apparently remaining a dominant factor. The industry is also looking forward to tomorrows (12/4) monthly Supply/Demand report from the USDA, which many expect to push the 2012-13 carryout significantly higher. March corn had slipped 4 3/4 cents to $7.29 1/2 bushel in early-morning trading, while December 2013 was essentially unchanged at $6.45.
Although a modest improvement in South American weather weighed upon soybean values last Friday, the market seems set to open strongly this week. And while weather news from Argentina and Brazil will probably remain dominant factors in the market, early news that China boosted its soy imports 3.2% in November is probably playing a big role in the rise. Traders may also be anticipating a bullish result on Tuesday’s USDA report. January soybeans had inched 1 1/2 cents higher to $14.73 3/4/bushel in early morning trading, while the November 2013 contract actually dipped 2 1/2 cents to $13.26 1/2/bushel.
While the grain industry is clearly worried about forthcoming production prospects for both Argentina and the U.S. Great Plains, the market didn’t perform well late last week or in overnight trading. Last Thursdays export sales report showed wheat sales year-to-date are running 220 million bu. behind the pace they should be on to justify USDAs current forecast for 2012/13 exports to hit 1.1 billion bushels, thereby raising questions about demand strength. This may set the market up for a bearish reaction to USDAs Dec. 11th WASDE update. CBOT March had fallen another 4 1/4 cents to $8.54/bushel in early morning trading, while KCBT March had slipped a penny lower to $9.08 3/4.
News that Russia seems prepared to halt imports of U.S. beef and pork that haven’t been tested for the growth promotant ractopamine undercut CME livestock futures last Friday. That decline, as well as sizeable wholesale losses posted in mid-afternoon, probably persuaded cattlemen to take substantially reduced bids from beef packers later in the day. Preliminary reports suggest fed cattle prices dropped from around 127 cents/pound to the 124-cent range. That bodes ill for this mornings futures opening. February cattle declined 0.72 cents to 130.45 last Friday, while its April counterpart fell 0.45 cents to 134.50 cents/pound.
Fridays Russian news also seem to depress CME lean hog futures, since the drug concerned, ractopamine, is probably more heavily used for hogs than for cattle. Large seasonal losses in both cash hog and pork values probably weighed upon the market as well. Thus, February hogs fell 0.90 cents to 83.55 cents/pound on Friday, while June futures dropped 0.70 cents to 98.32 cents/pound. Anticipated cattle weakness may also weigh upon hog futures this morning, but the very modest drop in pork cutout Friday afternoon probably surprised traders. Hog futures may open more firmly than do their counterparts in the cattle pit.
Cotton futures ended last week mostly higher in response to a very favorable weekly export sales report on Thursday. The underlying suggestion that cotton demand is proving comparatively robust these days was seemingly reinforced Sunday night, when an Indian report indicated that its (April 2012-March 2013) cotton yarn exports to China could post an annual increase of 20%. It will be interesting to see if the USDA confirms that strength on Tuesday’s supply/demand report. March cotton rose 0.10 cents to 73.89 in early morning trading, whereas new crop October was unchanged.