Corn prices are expected to open mixed on Wednesday. Old crop corn remains tight and commercial buying is expected to cause old crop contracts to start the day modestly higher. New crop contracts will probably be down at the start of Wednesday’s trading. The effects of outside markets will be generally negative, with a stronger dollar and a decline in the Dow Jones Industrial Average. The corn basis remains strong which is another sign of tight supplies.
Soybean prices are expected to open steady to 3 cents lower on Wednesday. The overall outlook for soybean demand is strengthening. New soybean production estimates from South America continue to be below the last USDA forecast in early March. But traders have a sizable net long position in the market and with falling prices for metals, crude oil, global stocks, and livestock there will be some pressure on traders to limit risk by cashing out their soybean contracts.
Wheat prices are expected to open 5 to 8 cents lower in Chicago. The strengthening dollar is a threat to wheat exports. Market fundamentals are already bearish, especially for soft red winter wheat and anything that looks like it might reduce demand will pressure the market. Even spring wheat contracts are forecast to start the day lower on Wednesday. The September Kansas City price is near its highest level since November and falling prices could trigger some long liquidation.
Cattle prices are forecast to open down 10 to 50 cents. There was at least a partial break in the cash cattle market on Tuesday with several thousand head selling for $2 to $3 less than the average level of the previous week. The big cash premium to futures coupled with dismal beef cutout values are pressuring feedlot operators to accept less money. The beef cutout value was sharply lower on Tuesday and packers are losing money every day. Cattle futures will probably continue to work lower until beef prices show signs of recovery.
Lean hog futures are expected to open down 10 to 30 cents. The price rally on Monday was fueled by ideas that pork prices were turning higher. However, that turnaround in pork prices hasn’t panned out so far and the cutout value dropped by more than $1.50 on Tuesday’s to its lowest level since the first few days of January in 2011. As is the case with cattle, hog processing margins are far in the red as they have been for weeks and there is little chance for a significant rally in cash hog prices or in hog futures prices until cutout values turns higher.
Cotton futures are expected to open down by 1 to 1.5 cents per pound. Cotton prices fell sharply in overnight trade as traders reacted to concerns that the FED’s very accommodative policies that have fueled the economic recovery may be coming to an end. Minutes from the last FED meeting showed officials believe that the economy has strengthened moderately. The fear is that with the improvement in the economy, the FED may back off on some of their “quantitative easing” that has spurred economic activity. The overnight strength in the dollar was another factor putting pressure on cotton futures.