The corn market was neutral-higher early Wednesday and has traded mostly flat this holiday week, ahead of the New Year. Ethanol production numbers are due out this morning and export sales numbers will be released Thursday morning. The US dollar was higher, while gold and brent crude were lower. On Tuesday, Argentina scrapped limits on how much corn and wheat the country can export in the new regime’s latest measure to reinvigorate their ag sector which accounts for 35% of their GDP, compared to the U.S. at less than 5%. The news may pressure corn futures that already contend with less-than-impressive exports due to rising global competition, particularly from S. America. Traders look to the Jan 12 WASDE and Crop Production reports for supply clarity and market direction. March corn futures were 0.5 cents higher at $3.63 early Wednesday morning, while May gained 0.5 cents at $3.695.
Soybean futures were higher for the second session Wednesday morning as the Brazil weather outlook alleviates production fears. However, while rain in the Mato Grosso region has dispelled worries that Brazil will miss their expected 100.00 mmt production forecast, weather reports suggest rains in northeastern Brazil still won’t be enough to fix the dryness or restore soil moisture and water supply to normal. Funds were net buyers of 3,500 soybean, 1,000 soymeal, and 2,000 soyoil contracts Tuesday. March soybean meal tested contract lows, weighed by Argentina competition and slowing U.S. crush. Soybean basis bids have remained flat despite flood-disrupted river logistics with farmers still in holiday mode. Soybean futures move 3.5 cents higher to $8.735 early Wednesday, while Jan soyoil gained 1 point to 30.53 cents per pound and January meal was neutral at $268.50.
March Chicago wheat futures were higher Wednesday morning and were up 2.1% from Monday’s open, after excessive rains deluged much of the Midwest. While potential damage to the dormant winter wheat crop is still being evaluated, freezing temps causing a “cold kill” remains on the radar. Temps in Russia, the world’s fourth largest wheat exporter, has caused growing concern about damage to their crops after unseasonably warm temps in recent weeks reduced the snow cover protecting them. Ukraine’s ag consultancy raised their winter wheat forecast for 2016 to 17.8 million tonnes, still less than the 2015 harvest of 23.4 million tonnes due to drought. Argentina eliminated their wheat export quota Tuesday. March CBOT wheat futures gained 2.75 cents to $4.785 per bushel Wednesday, while Mar KC wheat was 1.75 cents higher to $4.75, and March MWE climbed 1.25 cents to $4.9875.
Live cattle futures fell Tuesday with light trading pressuring prices lower. Investors closed out bull bets, following a week of strong gains. Demand in the cash market and snow storms have limited losses pushing futures off multi year lows. Last week’s cash sales after prices surged over 9% have quieted this week keeling the markets quiet. Beef production has modestly increased over the course of the fall, and last week’s estimated output was 5.6% larger than the same period last year. Beef Cut Outs are up. Choice cuts were up 4.70 to 205.79, and select was up 3.18 to 196.38. Cattle slaughter for this week is at 198,000 head vs 227,000 head last week and 227,000 last year. February live cattle declined 0.80 cents to 135.350 cents/pound Tuesday, while April futures dropped 0.875 cents to 136.500. March feeder cattle lost 0.50 cents to 158.475 cents/pound Tuesday, and April feeders declined 0.375 cents to 159.500.
Lean hog futures firmed Tuesday but were limited by selling across the livestock markets as investors exited bullish bets before year’s end. Light buyer support through the rest of the year should keep prices steady limiting downside potential. Country hogs are down 0.66 to $47.19. The average packer margin for Tuesday was $41.80 per head, up from #39.30 on Monday. Monday’s wholesale pork price gained 84 cents to $70.50 per cwt, supported by higher costs for all cuts. Heavy weight hogs were shown to be 5% larger than a year ago while actual slaughter has been running 8% above a year ago, suggesting supplies could tighten the next few weeks. Slaughter this week is estimated at 849,000 head vs 874,000 last week and 866,000 a year ago. February futures closed 0.075 cents/pound higher at 59.20 cents/pound Tuesday, while April hogs lost 0.325 to 65.725.
Cotton futures were higher Wednesday ahead of the New Year holiday. Following years of drought, cotton farmers welcomed the West Texas snowstorm which was the strongest in 30 years. The storm brought much-needed moisture and could boost yields and acreage next year. After the slow-news holiday period, the Jan 12 supply/demand report could provide market-moving data. Globally, cotton stocks remain extraordinarily high at 104 million bales (480 lb.), or nearly 50 billion pounds of cotton. That’s enough to make 127 billion t-shirts, or 17 for every person on earth, according to estimates from the National Cotton Council. This is driven by China’s stockpiling program, which has their stocks accounting for nearly 60% of world supply. March cotton moved .15 higher to 64.02 cents/pound early Wednesday, while May cotton gained 0.11 to 64.73 cents/pound.