Corn futures stabilized to fractions either side of unchanged in overnight trade. Sagging export demand tied to the strong U.S. dollar continues to weigh on prices and threaten a reduction in USDA’s forecast for 2014/15 exports in the December WASDE update. Stabilizing factors are harvest nearing completion at 94% in yesterday’s crop progress report from NASS, up from 89% the week before. That means declining hedge pressure as a negative influence on prices, particularly with farmer sales slowing to a trickle.
Soybeans firmed overnight on continued strong demand from China, which booked another 235,000 metric tonnes yesterday. Weekly export inspections were 2.8 million bushels, the 5th straight week over 2 million bu. at a time of year where they normally trail off sharply with buyers shifting attention to S. American new crop becoming available for the Feb-Apr period. But further strength could be constrained by evidence in fund activity that some funds are shifting out of short positions in wheat and shorting soybeans instead following the $1.60 rally off October lows that peaked Nov. 12 and topping action on charts since then.
Wheat futures closed mixed on Monday and not much changed in overnight trade, with CBOT losing a penny or so and KC and MGE wheat gaining a penny or so. Traders are in a quandary with valid reasons to be concerned about potential winterkill in parts of the U.S., southern Russia and western Ukraine, but equally valid reasons to monitor slowing export sales that are just barely on pace to meet USDA’s current forecast. Wheat could find some support today from overnight news out of Russia where even Russian authorities report condition ratings well under long-time averages.
Both live cattle and feeder cattle futures plunged Monday after initial selling pressured futures below some key chart support, triggering a “sell” signal to technicians that only fed further selling from funds liquidating to preserve profits. Cash cattle remain firm, however, with a record $174 paid just last week. But with spot December futures now sporting a nasty-looking downside key reversal on yesterday’s action, any weakness in cash bids may will trigger follow-through selling, even with December already at a discount to cash cattle.
Futures are looking vulnerable with slaughter rates finally starting to pick up to levels in line with expectations based on recent Hogs & Pigs report data. Timing for a pick-up in slaughter is bad news for any market bulls because it comes at a time when seasonal demand sags over the Thanksgiving holiday and the normal strength seen in ham prices as the most popular alternative to turkey isn’t occurring this year.
The cotton outlook remains weak for both fundamental and technical reasons after recently sagging to 5-year lows. Further, weak Chinese cotton futures are beginning to lead rather than follow ICE futures. Producers all over the world are facing losses. India reported overnight that even though they expect a record crop of 40 million bales, their government purchasing authority reports purchases thus far down 19% from a year ago on farmer balking at current offers. The best hope for cotton price recovery is a global drop in acreage for 2015 as farmers shift to other crops.