Forecasts for favorable Brazilian weather seemed to depress the corn and soybean markets early Monday morning, although Argentine conditions look they’ll continue drying. One also has to suspect that the crop markets adjusted downward along with equity index futures in the wake of last Friday’s strong financial, currency and commodity market advance led by the DJIA. Technicians may also be testing to see if a retest of support around the nearby corn future’s 40-day moving averages will hold. March corn futures slid 4.0 to $3.68 bushel Sunday night, while the May contract declined 4.25 to $3.725.
As one would expect, forecasts for benign short-term weather in Brazil are weighing on soybean futures to start the week. Concerns about potential downgrades in South American weather forecasts probably exaggerated last week’s late rally, as did the major advance posted by the equity markets on Friday. The surge reversed what had looked like a decisive downward move on Thursday, so traders may be reluctant to buy very aggressively at this point, especially with the global soy market being very well supplied at this point. March soybean futures sagged 4.25 cents to $8.78/bushel in early Monday action, while March soyoil slipped 0.02 cents to 30.86 cents/pound, and March meal dipped $2.8 to $269.6/ton.
The wheat markets were confused by shifting Russian statements about that county’s potential changes to its export taxes and restrictions on grain exports. Over the weekend traders seemingly decided the Russians are unlikely to make any substantial changes in the short term. When combined with the corn and soybean slippage, as well as the weakness exhibited by equity index futures, it wasn’t terribly surprising to see wheat futures declining as well. March CBOT wheat dropped 5.75 cents to $4.735/bushel as Monday dawned over Chicago, while March KC wheat slumped 4.0 cents to $4.68, while March MWE skidded 2.25 to $4.9775.
Cattle futures ended Friday rather poorly. Wire service sources suggests bullish profit-taking sparked the drop, but one has to suspect traders were also less than confident about the outcome of last week’s cash market result. That is, little trading had reportedly occurred prior to the close. Packers were apparently unwilling to pay up for cattle and producers were more than likely holding out for at least steady bids. No news on the cash front emerged prior to the 2:00 PM release of the biannual Cattle inventory report. Those numbers were generally higher than expected, which may bode ill for Monday’s opening. February live cattle closed just 0.12 cents lower at 135.30 cents/pound Friday afternoon, while April futures fell 0.52 cents to 134.00. March feeder cattle plunged 2.17 cents to 157.25 cents/pound and April feeders dove 2.27 cents to 156.67.
Friday’s hog and pork news didn’t seem particularly bullish, as exemplified by afternoon USDA reports indicating cash and wholesale prices had risen quite modestly on the day. Bulls may have taken their lead from the CME index. That is, while it remains well below the various futures contracts, it has clearly been accelerating upward lately. Having the equity markets post such strong gains probably caused considerable copycat buying in the hog market as well. February hog futures moved up 0.50 cents to 65.80 cents/pound at their Friday afternoon settlement, while April hogs jumped 1.00 to 70.70 cents/pound.
Cotton futures began the week in mixed fashion after a disappointing Friday showing. That is, after attempting to rally in concert with the equity markets, the various ICE fiber contracts closed significantly lower. Concerns about large global supplies and weak demand seemed to weigh on prices. The weekend stock market setback seemed to exert additional pressure upon nearby March futures to start the week, but the May future edged upward. The market look technically weak, March cotton skidded 0.03 cents to 61.10 cents/pound early Monday morning, while May cotton inched up 0.02 cents to 61.62 cents/pound.