The grain and oilseed markets were lower on the first trading day of 2016, weighed by Monday’s Chinese stock market plunge. The Shanghai Composite lost 7% at the close Monday, while the Shenzhen Composite lost over 8%. U.S. stocks responded lower before the open Monday with S&P and Dow futures down nearly 2% on renewed Chinese demand concerns. In Brazil, the weather forecast remains mostly unchanged from that of last Thursday with nearly all of Brazil getting rain at one time or another during the next two weeks. The precipitation will be sufficient in the north through Friday of this week to improve topsoil moisture in most crop areas and to reduce concern over further declines in production potential. CFTC data will be released this afternoon. March corn futures moved 0.75 cents lower to $3.58 early Monday day morning, while May was 0.75 lower at $3.6375.
Soybean futures weakened to start the new year after poor economic data led to a sell-off in the world’s second largest economy. Sinking Chinese equities revived fears that China, the world’s largest soybean importer, will fail to meet their projected demand for U.S. soybeans, pressuring futures already weighed by improving Brazilian weather and prospects of the largest U.S. soybean crop in history. The latter will be clarified in the USDA WASDE, out a week from Tuesday. Rain fell across much of Brazil during the long New Year holiday, but much of the rain was not enough to counter evaporation and net drying northeastern Brazil. Many of the areas impacted with net drying likely experienced at least some crop moisture stress during the period. March soybeans moved 4.5 cent lower to $8.6425 early Monday, while Mar soyoil lost 39 points to 30.36 cents per pound and January meal fell $.30 to $264.00.
The wheat complex followed corn and beans lower early Monday morning, despite a weaker dollar and higher oil futures on Mideast tensions. The rout in Chinese stocks continued to challenge global demand for commodities, weighing wheat futures already near contract lows on large world supply and a 40-year low pace for wheat exports. Midwest flooding has threatened soft red winter wheat, though dry weather and quickly receding waters could minimize losses in SRW wheat, which accounts for 25% of total U.S. wheat production. Temperatures in Russian and Ukraine were expected to rise this week after falling dramatically at the end of December, easing worries that the severe cold could damage their wheat crops. March CBOT wheat futures moved 1.25 cents lower to $4.6875 per bushel early Monday, while Mar KC wheat lost 5 cents to $4.635, and March MWE fell 2.5 cents to $4.9075.
Cattle futures were neutral-lower on Thursday. The market strengthened early last week as retailers stocked up on steaks and roasts. The increase demand gave more incentive for packers to bid more aggressively in the cash markets. Nearby live cattle futures fell $30 per cwt in 2015. Boxed beef firmed with choice up 2.05 to 210.83 and select up 1.62 to 203.13. Cattle slaughter for this week was week was estimated at 396,000 head vs 395,000 head the previous week and 321,000 the year before. February live cattle declined 0.50 cents to 136.250 cents/pound Thursday, while April futures dropped 0.575 cents to 137.40. March feeder cattle increased 1.650 cents to 163.275 cents/pound Thursday, and April feeders gained 0.850 cents to 163.075.
Lean hog futures are slightly weaker for the front months on light trading and profit taking from Wednesday’s gains. Adding pressure to the thin market is the ample supplies technical selling as traders exit their bull positions. Light buyer support as kept steady limiting downside potential. Country hogs are 0.50 higher to $48.29. Cash hogs in the US Midwest are unchanged even as packers are buying supplies for the rest of the week, including Saturday’s post New Year’s holiday kill. The average pork packer margin for Thursday was $34.10 per head, down from $39.90 on Wednesday and down $1.30 a week ago. Slaughter this week is estimated at 1,664,000 head vs 1,516,000 last week and 1,236,000 a year ago. February futures closed 0.10 cents/pound higher at 59.875 cents/pound Thursday, while April hogs lost 0.125 to 65.90.
Cotton futures finished 2015 on a weaker note. The worst snow storm hit West Texas in more than 30 years bringing much needed moisture to the farmland in the top US growing cotton state. The soil moisture should help prepare the land for sowing in the spring after years of drought and benefit yields next year, potentially increasing acreage. Cotton futures have fallen by more than two-thirds since 2011 when drought and strong buying from China pushed prices to the highest since the US Civil War. After the slow-news holiday period, the Jan 12 supply/demand report could provide market-moving data. Globally, cotton stocks remain extraordinarily high at 104 million bales (480 lb). USDA reported upland cotton weekly export sales, for the week ending Dec 24, at 106,700 RB for the marketing year 2015/16. Sales are down 10% from the previous week and 27% from the prior 4 week average. Export shipments were reported at 158,600 RB up 24% from the previous week and 54% from the prior 4 week average. March cotton declined 0.65 to 63.32 cents/pound on Thursday’s close, while May cotton dropped 0.56 to 64.15 cents/pound.