Grain and oilseed markets weakened Thursday morning as China’s stock market fell sharply, eclipsing recent crop market short-covering in anticipation of next Tuesday’s WASDE. Chinese stocks traded for only 30 minutes, ending the shortest trading day in their history after a newly installed mechanism to limit volatility was triggered for the second time this week. The sell-off came after the Bank of China made its largest devaluation to the yuan since August. Crude oil prices fell another 3% after falling 6% Wednesday, to levels not seen in over a decade. Trade estimates for corn export sales are 400,000-600,000 tonnes. The quarterly stocks estimate for corn is 11.237 billion bu. The Shanghai Composite closed 7.3% lower at their Thursday close, while the Dow points lower ahead of the open with futures down 2.2%. March corn futures moved 2.25 cents lower to $3.51 early Thursday morning, while May was 2 cents lower at $3.565.
Soybean futures were lower Thursday morning, pressured by Chinese volatility and burgeoning US and S. American production yet braced by technical selling and potential for Brazilian weather premiums. Estimates for weekly soybean export sales are 400,000-700,000 tonnes. The quarterly stocks estimate for soybeans is 2.72 billion bu while the Jan production trade estimate is 3.981 billion bu with an average yield of 48.3 bu/ac, which if realized would match the Dec estimate. Soybean harvest in Mato Grosso and Parana, Brazil has begun with farmers on edge to see how yields were impacted by dryness. March soybeans moved 5.5 cents lower to $8.5975 early Thursday, while March soyoil lost 29 points to 29.49 cents per pound and March meal fell $0.7 to $268.00.
Wheat future tested lows Thursday morning ahead of the export sales report. Estimates for weekly wheat export sales were 200,000-400,000 tonnes. The quarterly stocks estimate for wheat is 1.698 billion. Winter acreage estimates are: Total winter wheat 39.320 million acres, hard winter wheat 28.810 million acres, soft winter wheat 7.144 million acres, and white winter wheat 3.366 million acres. Egypt’s new wheat import requirements could delay sales to the region. Wheat imports must have zero ergot fungus. Despite wheat being among the most resilient crops in adverse weather, extreme cold weather in the next two months could be damaging. Winter wheat accounts for 66% of U.S. and Russian wheat and 95% of Ukrainian and French wheat. March CBOT wheat futures moved 4.75 cents lower to $4.58 per bushel early Thursday, while Mar KC wheat lost 4.75 cents to $4.5625, and March MWE fell 1.75 cents to $4.88.
US Cattle futures were flat after Wednesday gains. Prices climbed to a new 2 month high as traders added bull bets anticipating a strengthening in demand. Winter weights and strong wholesale demand continue to support the beef cash market and pushing packer margins negative. Beef cutouts continue their surge higher. Choice cuts are up 4.47 to 226.78, while Select cuts are 4.22 higher to 220.83. Estimated slaughter for the week is estimated at 315,000 head vs 309,000 last week and 321,000 last year. February live cattle dropped 0.25 cents to 136.525 cents/pound Wednesday, while April futures gained 0.05 cents to 137.30. March feeder cattle increased 0.40 cents to 165.45 cents/pound Tuesday, and April feeders gained 0.58 cents to 165.325.
Lean hogs were flat to unchanged on weakness in the live cattle market. Wednesday, government data shows hog weights increased by 3.2 lbs from last week to 286.3 lbs for Iowa/Minnesota. The higher weights pressured an already weaker market. The cash market and wholesale pork prices, as processors replenish inventories after the holidays, limited Wednesday’s dip. Lean hogs jumped 2.8% on Tuesday driven by bull spreading and expectations of tighter supplies and retail demand strength. The trade has begun to anticipate a reduction in the number of market-ready hogs coming to market. Estimated slaughter for the week is estimated at 1,307,000 head vs 1,290,000 last week and 1,259,000 last year. Country hogs are higher 0.37 to $49.15. February futures closed 0.27 cents/pound higher at 61.375 cents/pound Wednesday, while April hogs gained 0.23 cents to 66.225 cents/pound.
ICE cotton futures continued its weak trend, off the near-term high of 65.23. Cotton futures tested a six week low on large open interest as concerns about China’s economy and renewed farmer selling pressured prices. A Reuters survey indicates that US farmers will increase the planted area for cotton in 2016. Increased moisture in the Texas and Oklahoma areas are supporting this increase. Prices rose 5% in 2015, ending the year as one of only a small handful of commodities to gain on the year. Last year’s gains is expected to increase planted acres by roughly 13% from 2015. Even with the increase, acres are still below historical averages as China, the top consumer, has built inventories to keep prices in check over the past two years. After finishing a winner in 2015, among the few commodities that ended the year higher, the trade will look to fresh supply/demand projections in the WASDE report due out next Tuesday. In December, the USDA forecast U.S. cotton production at 13.03 million bales (480 lb.) from 16.32 million in 2014/15, exports at 10.00 million bales from 11.25 million in 2014/15, and ending stocks at 3.00 million bales, from 3.70 million in 2014/15. The USDA’s current forecast range for the average farm price of U.S cotton for 2015/16 is 56.00-62.00 cents per pound. March cotton closed .68 lower to 62.00 cents/pound Wednesday, while May cotton lost 0.70 to 62.75 cents/pound.