Corn futures continued to creep higher in overnight trade. Slow farmer selling is resulting in firmer basis as the unseasonably cold weather spurs domestic feed demand at the same time demand from ethanol plants is firming as well. Export demand is still sluggish, however, due largely to the soaring U.S. dollar. News that China will resume building government stocks of corn to shore up its domestic prices will not help, even though those prices are already 20% higher than world prices, as China continues to balk at cheaper U.S. corn on grounds it may contain a genetically modified strain not yet approved for import. Trade will open with December corn up 2.5 cents in overnight trade at $3.76 ¾.
Soybean futures were steady to mixed in overnight trade, ranging from a cent or two higher to a cent or two lower. Slow farmer sales and firming basis are supportive, as is continued very strong export demand for soybean meal. The spot March contract is up against overhead resistance in the $10.60 area, and a convincing close over that level will open up a likely test of the mid-November high at $10.90. Also supportive were reports yesterday that the U.S. Congressional Budget Office (CBO) has a preliminary forecast for soybean acreage in the U.S. to drop by 2 million acres in 2015.
Wheat futures continued to firm in overnight trade, buoyed by slower farmer selling and ongoing uncertainty about vulnerability to winterkill in parts of the U.S. Plains and the Black Sea region which were poorly established to start with and lack protective snow cover. Kansas City December has punched through important overhead resistance at $6.20 with the next layer at $6.30; beyond that summer highs at $6.50. At the CBOT, December is poised to challenge mid-month highs at $5.65 and at the MGE it just took out mid-month highs at $5.90 yesterday and no significant chart resistance now until $6.05-$6.10.
Cattle and feeder cattle futures went in opposite directions Tuesday with a speculative sell-off, firming corn prices and a surge in supplies from the fall calf run pressing feeders while firming wholesale beef prices and cash bids at a premium to futures lifted the latter. But further upside for both cash and futures is vulnerable with packer margins deep in the red despite soaring retail prices. USDA just recently raised its retail beef price forecast again for 2014 and predicted still further rise in 2015.
Hog futures have been choppy at best so far this week and yesterday’s downside reversal just short of the downtrend line in December futures giving charts a weak appearance. Rising slaughter runs aren’t particularly bearish since they’ve just risen to levels consistant with Hogs & Pigs report data after running suspiciously low for several weeks prior. Cash hogs are steady to firm as we’re nearing the end of any seasonal bulge in slaughter numbers and the time when ham demand picks up right after Thanksgiving. This year, however, ham inventories at the retail level are already quite high.
While cotton finally scored a modest rebound in concert with other commodities Tuesday, the fundamental situation remains grim with projected global ending stocks alone enough to meet current global usage for more than 11 months. Low prices are beginning to discourage producers globally, however. India expects to harvest a record crop of 40 million bales this year, yet their government purchasing agency reports farmer sales down 19% from a year ago, balking at prices offered; more evidence that global cotton acreage may decline in 2015, not just the U.S.