Talk of weak ethanol demand is undercutting corn futures. The weekly EIA report on the energy sector will be released this morning and traders reportedly expect it to indicate weak demand for ethanol, which in turn implies diminished interest in corn. A report that China continues stockpiling corn to support its domestic farmers may also be weighing on prices. March corn slipped 1.75 cents to $3.795/bushel Tuesday night, while July skidded 2.0 to $3.95.
The soy complex accompanied the grain markets modestly lower. Prospects for huge South American soybean crops and ideas that Chinese buyers are shifting their buying are probably depressing U.S. prices at this point. Conversely, the perception that underlying demand for U.S. meal remains quite robust, as well as overnight gains in Asian palm prices, are apparently spurring bargain hunting among Chicago traders. March soybean futures sagged 3.0 cents to $9.7075/bushel as the Wednesday dawned over Chicago, while March soyoil dropped 0.27 to 30.90 cents/pound, and March meal lost $0.9 to $335.7/ton.
The wheat markets led the way lower Tuesday night. The U.S. wheat market is still widely perceived as being overpriced in a global context. Bears were also encouraged overnight by talk of accelerated Ukrainian selling, which could further undermine American quotes. The seeming lack of movement in the Russia-Ukraine conflict may also be bullish positions. March CBOT wheat slumped 4.25 cents to $5.1475/bushel early Wednesday morning, while March KC wheat sank 5.75 cents to $5.445/bushel, and March MWE wheat slid 2.75 to $5.6375.
Cattle futures staged a big technical bounce Tuesday. CME cattle traders had apparently anticipated the big beef losses posted Monday afternoon, since the Chicago market opened firmly in the face of that news. The subsequent futures surge suggested the industry viewed the recent breakdown as being greatly overdone. Technicians probably jumped on the bandwagon as well. Tuesday’s late GLOBEX slippage implies a weak opening today. February and April live cattle futures leapt the 3.00-cent daily limit to 152.82 and 151.00 cents/pound, respectively, at their Tuesday close. January feeder cattle futures tumbled 0.87 cents to 210.77, but March feeders soared 3.85 cents to 203.82.
The stock drop may have exaggerated losses in the hog pit. Chicago hog prices rallied strongly again on Tuesday’s opening, thereby seeming to reflect renewed optimism about the short-term outlook. However, futures reversed shortly after the opening and gave back a sizeable portion of the early advance. The stock market breakdown probably discouraged bulls, but the morning drop in pork values likely caused the reversal. The afternoon reports indicated a big drop in pork quotes, which bodes very ill for today’s opening. February hog futures ended Tuesday having fallen 1.40 cents to 69.42 cents/pound, while June hogs dropped 0.62 cents to 81.57.
Cotton accompanied the other crop markets lower. Cotton futures performed surprisingly well Tuesday in the face of the huge equity market breakdown. Concurrent U.S. dollar losses probably softened the bearish stock market impact, but traders may also have been reacting to a low spring plantings forecast published Monday afternoon. We suspect traders were disappointed with overnight gains in equity index futures after stocks seemed set to reverse strongly higher in the wake of the Apple earnings report. March cotton futures fell 0.22 cents to 58.56 cents/pound shortly after sunrise Wednesday, while the July contract dipped 0.20 to 60.20.