Corn futures began Thursday weakly in the wake of a big Chinese purchase of Ukrainian grain, then followed soybeans lower after the Chinese canceled a big purchase of US legumes. The drop also pushed the nearby March future below recent support associated with its 40-day moving average, which seems technically bearish. However, bears may prove reluctant to sell aggressively ahead of the weekend, especially with drought seeming to take a toll on Argentina’s growing crop. March corn futures dipped 0.25 cent to $$3.6525/bushel in predawn Friday action, while the May contract edged 0.25 lower to $3.705.
News that Chinese buyers had canceled purchases of 14.5 million bushels for 2015/16 spurred a big sell-off in the soybean market Thursday, with nearby futures’ failure at their respective 40-day moving averages likely exaggerating the drop. Futures are mixed in early morning action. As in the grain markets, traders may be thinking more about the potential for South American dryness rather than other fundamental or technical considerations. Rains in Brazil and Argentina have been very sporadic, with some areas being parched for a week or two, then in danger of flooding a few days later. March soybean futures inched up 0.25 cent $8.68/bushel Thursday night, March soyoil skidded 0.03 cents to 30.66 cents per pound, and March meal added $0.30 to $267.20/ton.
Wheat futures continued sliding in the wake of mid-week losses in early Friday trading. The technical situation seems less than promising at this juncture after Tuesday’s bullish breakout attempt proved unsustainable. Russian news may be undercutting the market again, after a high-ranking official questioned the need for grain export curbs. One also have to wonder if the industry is cutting its long positions aimed at protecting against a rally driven by the risk of a winter freeze in the US Plains and/or the Black Sea region. March CBOT wheat slipped 01.0 cent to $4.7125 per bushel in early Friday trading, and March KC wheat sagged 1.5 cents to $4.6325, while March MWE slid 0.25 cent to $4.95.
US Cattle futures closed slightly lower Thursday after futures failed at three-week high earlier in the day. Traders recently had pushed the futures higher expecting demand to support cash prices on higher futures prices. Lack of selling on weak cash bids, though, pressured Thursday trading further south. Weather concerns in the western Corn Belt are expected to slow weight gains, potentially supporting local cash bids. US beef cutouts were mixed Thursday on light demand and conservative sales. Choice cuts down 1.21 to 220.12, while Select cuts gained 0.41 to 215.43. The spread tightened even more today from over $6 to now $4.69. February live cattle declined 0.30 cents to 135.425 cents/pound on Thursday’s close, while April futures fell 0.72 cents to 134.525. March feeder cattledropped 0.50 cents to 159.425 cents/pound and April feeders dipped 0.65 cents to 158.950.
Nearby hog futures finished relatively unchanged Thursday, with deferred months moving generally lower. Strong cash and wholesale values limited potential losses from the weaker cattle market. Cash hogs are up 0.55 to an average weighted price of $59.61. Pork packer margins gained Thursday to +$28.81 vs +$27.86 on Wednesday and down from +$32.16 on Tuesday. The average pork prices dropped in grocery store advertisements. The five cut average for pork prices fell to $2.87 a pound from $3.13 last week, and down from $3.33 the previous year. This agrees with ideas that low prices are powering strong consumer demand. February hog futures closed 0.08 cents/pound lower at 65.300 cents/pound Thursday, while April hogs lost 0.78 cents to 69.70 cents/pound.
Cotton futures surprised very few by rallying in concert with the equity markets Thursday and again overnight. Fiber values had previously declined rather substantially, as indicated by March futures quotes reaching three-month lows Wednesday. As indicated previously, the cotton market is heavily dependent upon apparel demand, so the industry and traders seemingly pay close attention to stock market fluctuation and their implicit forecasts about the intermediate-term economic outlook. March cotton advanced 0.33 cents to 61.69 cents/pound early Friday morning, while May cotton gained 0.13 cents to 62.04 cents/pound.