Weather forecasts affected crop markets to start the week. After rallying on strong export news last Friday, corn futures slipped in early Monday trading. Wire service sources cited a modest improvement in South American weather forecasts, which may increase their productive potential for the slide. Weekend energy sector losses also seemed to weigh on corn via its connection to ethanol. It will be interesting to see if the setback lasts long, since the Friday advance pushed the nearby contracts decisively above their pivotal 40-day moving averages. March corn futures dipped 0.75 cent to $3.695 /bushel Sunday night, while May lost 1.0 cent to $3.7375.
Improved South American weather forecasts seemed to weigh upon soybean futures at the start of this week’s trading, since those might add to the mountainous harvest expected from the region during the weeks ahead. Crude oil losses exerted fresh negative influence over the soyoil market, but one wonders if the surprisingly large placement total on last Friday’s Cattle on Feed report caused the slight bounce in meal futures. March soybean futures slid 1.75 cents to $8.7475 as Monday dawned over Chicago, while Mar soyoil fell 0.21 points to 30.29 cents per pound and March meal inched up $0.60 to $269.10.
Wheat futures got an upward nudge from weather concerns, since the latest forecasts apparently boosted concerns about winter freeze damage in the Black Sea region. Snow covered fields are generally immune to damage from arctic conditions, whereas a lack of cover can be deadly for seedlings. In contrast to the energy market connections also weighing on corn and soybeans, wheat is relatively immune to such concerns. March CBOT wheat climbed 2.75 cents to $4.7825 per bushel in early Monday action, and March KC wheat advanced 3.0 cents to $4.7375, while March MWE rose 3.0 cents to $5.00.
Live cattle found support finishing up for a second consecutive day. Prices were supported on technical buying and position squaring before Friday’s Cattle on Feed report along with the cold storage report. Following live cattle along with technical buying pushed feeder call higher on Friday. USDA reported cattle on feed as of January 1 at 10.57 million head, 100% of last year’s 10.63 million head. Total head is in line with average trade estimate of 10.52 million head. Total head is down from the previous month’s 10.8 million head. The US cold storage report shows beef stocks in line with trade estimates at 513.9 million lbs, up from last month’s 510.6 million lbs and up from last year’s 444.4 million lbs. Cattle slaughter for the week (including Saturday) is estimated at 569,000 head vs 568,000 last week and 581,000 last year. 2016 year to date slaughter total is 1,735,000 head vs 1,807,000 head for the same period the previous year. US beef cut outs continue to fall. Choice cuts are down 2.24 to 225.43, while Select cuts are 2.10 lower to 220.98. February live cattle rose 1.82 cents to 132.75 cents/pound on Friday’s close, while April futures gained 1.90 cents to 133.075. March feeder cattle climbed 3.68 cents to 157.90 cents/pound and April feeders gained 3.38 cents to 157.825.
Lean hogs closed lower, as profit taking triggered selling pressure. Current futures premiums to the hog index, further pressured selling activity. Strong cash prices and positive wholesale pork values limited the fall. The US cold storage report shows pork stocks down from trade estimates at 545.6 million lbs, down from last month’s 560.9 million lbs and up from last year’s 503.8 million lbs. Hog slaughter for the week (including Saturday) is estimated at 2,329,000 head vs 2,300,000 last week and 2,317,000 last year. 2016 year to date slaughter total is 7,376,000 head vs 7,459,000 head for the same period the previous year. Country hogs are 0.59 higher to $55.35. February hog futures closed 0.75 cents/pound lower at 63.00 cents/pound Friday, while April hogs stalled down 0.03 cents to 69.000 cents/pound.
Although recent talk of potential Chinese sales out of official government stocks and cheaper man made fiber prices have seemed bearish for cotton futures, the market has been working higher lately. The latest gains have almost surely reflected the seeming reversal posted by the equity indexes Thursday and again in overnight action (in index futures), but the fact that nearby cotton futures remain above their early January lows in rather impressive. The overnight rally suggests the March contract may soon retest chart resistance around its 40-day moving average (at 63.03 cents/pound), but its ability to top that level is not assured. March cotton surged 0.36 cents to 62.45 cents/pound on Friday’s trading, while May cotton ran up 0.37 to 62.83 cents/pound.