Early equity gains and sustained short covering reportedly powered Wednesday’s corn rally. However, the late stock market drop sent negative indications concerning demand prospects, thereby seeming to weigh upon prices again last night. Nearby March futures are also struggling against moving average resistance, trading around their 10-day moving average with the 20 and 40-day MAs looming at modestly higher levels. Still, the bullish impact of Tuesday’s reduction in the USDA’s estimate of the 2015 corn crop may provide considerable support. March corn futures dipped 1.75 cents to $3.5625 in predawn Thursday trading, close, while May lost 2.0 cents to $3.61.
Soybean futures set back from recent gains Wednesday night. Recent news has been very supportive, with CONAB cutting its forecast for Brazil’s forthcoming crop Tuesday morning, and the USDA reducing its estimate of 2015 US production later that morning. News of strong Chinese buying has also substantially reduced demand concerns. The global economic outlook remains an issue, as indicated by yesterday’s big equity market reversal to the downside. That development and bullish profit-taking probably account for much of the overnight weakness. March soybean futures declined 2.0 cents to $8.78 early Thursday morning, while Mar soyoil sagged 5 points to 29.49 cents per pound and March meal slipped $0.10 to $275.40.
Wheat futures are bumping up against strong resistance at this point. Futures appeared to gather significant support from the equity markets Wednesday morning, but sagged in concert with the stock indexes later in the day. Future demand strength is key to bullish hopes, since the US market remains relatively high by global market standards. Indeed, overnight news that Egypt will not reduce its official tolerance level for ergot in imported wheat dealt a fresh blow to bullish export hopes. From a technical standpoint, the nearby Chicago and Minneapolis contracts are encountering major resistance at their respective 40-day moving averages. In contrast, one could argue that Tuesday’s bullish Kansas City HRW response to the winter wheat seedings report pushed that market above the 40-day MA, thereby raising hopes for a follow-through rally. March CBOT fell 5.0 cents to $4.73 per bushel Wednesday night, while March KC wheat tumbled 4.75 cents to $4.7125 and March MWE slid 2.0 cents to $4.98.
Cattle prices rebounded from support Wednesday. The rally very likely reflected Tuesday news of Nebraska cash strength, as well as surprising beef firmness. That is, bears have been prowling through the cattle market in anticipation of a setback or full reversal in beef values in the wake of the huge early-winter advance. Tuesday’s sizeable drop in select cutout reinforced those concerns. Choice cuts were steady yesterday, while select values bounced. Bulls were also encouraged by the simple fact that nearby futures stabilized and rebounded at their respective 40-day moving averages Tuesday and Wednesday. That may set the stage for a fresh rally if the equity markets don’t follow-through upon Wednesday’s late losses. February live cattle gained 0.50 cents to 132.10 cents/pound Wednesday, while April futures gained 0.33 cents to 133.025. March feeder cattle rose 0.20 cents to 157.20 cents/pound and April feeders inched up 0.38 cents to 157.275.
Hogs opened positive, but reversed its way weaker later in Wednesday’s session. Although hog and pork fundamentals remain quite positive, the premiums to the CME index already built into futures prices may rallies from recent levels problematic. That may also be why hog futures seem sensitive to equity markets shifts, as exemplified by the late-session slide, since the bullish outlook at least partially depends upon persistently robust demand from both the domestic and export sectors. February hog futures closed 0.27 cents/pound lower at 61.625 cents/pound Wednesday, while April hogs dropped 0.15 cents to 67.15 cents/pound.
Cotton futures proved surprisingly strong Wednesday afternoon. The early strength was quite understandable, since Tuesday’s USDA data looked quite supportive and the equity markets were building upon Tuesday’s late advance. However, equities turned sharply lower late in the day, which makes the late day cotton firmness look quite impressive. Unfortunately for bulls, the stock indices remained flat to weak overnight, thereby seeming to send negative demand signals to the commodity sector. March cotton stumbled 0.16 cents to 61.98 cents/pound in early Thursday, while May cotton skidded 0.27 to 62.33 cents/pound.