NOTE: Doane will be closed Thursday and Friday in observance of the Christmas Holiday.
Corn futures inched higher early Wednesday morning after testing contract lows the previous session. Profit taking during the seasonally low-news time of year helped markets higher, but increased U.S. and S. American supplies along with a falling export pace have kept prices at or near lows. Weekly ethanol production estimates will be released this morning at 930 a.m. Weather in S. America remains a swing factor, challenging the USDA’s forecast for Argentina and Brazil’s corn production at 26.50 mmt and 85.00 mmt, respectively. The Supply/Demand report, along with the Crop Production and Grain Stocks reports will be released Jan 12. Funds were to have sold 7,500 corn contracts Tuesday. March corn futures were 0.75 cents higher at $3.67 early Wednesday morning, while May gained 0.75 cents at $3.7325.
Following Tuesday’s move lower, soybean futures edged higher Wednesday morning, still shy of breaking above the 100-day moving average of 8.88 after jumping 16 cents last Friday on Brazil weather. Consensus now surrounds the question of, how much, not if, Brazil’s soybean production will be lower, with analysts’ estimating a decrease of 1-5 mmt. As China seeks greater access to food, their largest grain processor, state-owned COFCO, will aquire Noble-Agri for $750 million, and will be renamed COFCO Agri. The moved position China with international grain assets, rivaling the “ABCD” quartet of grain conglomerates. January soybeans moved 1.25 cents higher to $8.865 early Wednesday, while Jan soyoil gained 20 points to 30.64 cents per pound and January meal fell $0.20 to $276.70.
Wheat futures climbed early Wednesday in the wake of sharp declines the past two days that brought March wheat within 5 cents of the contract low of 4.66. Funds were estimated to be sellers of 4,000 wheat contracts Tuesday. France’s Agritel estimates that Ukraine’s 2016 drought-plagued wheat production could drop by 30% to 17.2 million tonnes. In their last international tender, Egypt bought 240,000 tonnes of French, Russian, and Romanian wheat and now wants to fill Jan shipments. US wheat exports, at historic lows, look to developments in the currency markets to revive competiveness that is weakened by a stronger dollar. The dollar was .09 higher to 98.32. March CBOT wheat futures gained 1.5 cents to $4.7325 per bushel Wednesday, while Mar KC wheat was 1.25 cents higher to $4.7175, and March MWE climbed 0.25 cent to $4.98.
Live cattle surged over 2% Tuesday, fueled by storm forecasts in the U.S. plains and stronger-than-expected gains in cash prices. Snow flurries moving through the Plains could slow movement to the market and help reduce market-ready supplies, supporting prices. Tuesday’s cold storage report showed 510.48 million pounds of U.S. frozen beef supplies, lower than the expected 534.6 million. Choice cuts were down 0.58 to 190.70, and select was down 1.84 to 182.09. Cattle slaughter for the week, was estimated at 227,000 head, compared to 226,000 head last week and 231,000 a year ago. February live cattle gained 2.375 cents to 132.400 cents/pound Tuesday, while April futures climbed 1.775 cents to 133.350. January feeder cattle advanced 3.70 cents to 159.200 cents/pound Tuesday, and March feeders lifted 2.475 cents to 156.850.
Lean hog futures firmed Tuesday ahead of two key reports. The Cold Storage report, released after the close, showed November frozen pork stocks were 561.9 million pounds, the highest ever for the month, since record-keeping began in 1915. Supplies were down 7% from October but 14% higher than last year. Pork bellies were up 131% from last month and up 15% from last year. Estimates for today’s 2pm Hogs and Pigs report are: All Hogs as of Dec 1-101.5%, Kept For Breeding-100.8%, and Kept for Market-101.6%. Large supply points to near-term weakness until the post-holiday supply shift lower brings support. Hog slaughter so far this week was estimated at 875,000 million head, vs 879,000 million last week and 868,000 million a year ago. February futures closed 0.575 cents/pound higher at 57.025 cents/pound Tuesday, while April hogs gained 1.05 to 63.05.
Cotton futures were weaker Wednesday. Monday, investors boosted their net long position in ICE cotton to near 2.5 year highs in the week ending Dec 15, according the CFTC data last Friday. The third week of increased bullish bets saw 792 contracts added for a net long of 55,599 contracts, the largest level since Aug 2013. Globally, cotton stocks are extraordinarily high at 104 million bales (480 lb.), or nearly 50 billion pounds of cotton. That’s enough to make 127 billion t-shirts, or 17 for every person on earth, according to estimates from the National Cotton Council. This is driven by China’s stockpiling program, which has their stocks accounting for nearly 60% of world supply. Mar cotton moved .17 lower to 62.99 cents/pound early Wednesday, while May cotton fell 0.24 to 63.70 cents/pound.