Rebounding stock indexes encouraged commodity bulls Thursday night. Bearish weekly ethanol numbers weighed on the corn market Thursday, with traders reportedly taking profits on recent gains. Talk of reduced Indian and South African production likely sparked fresh optimism amongst corn traders, but the main driver of overnight gains was probably the big surge posted by equity index and energy futures. That is, such gains offer increased hope for the forthcoming economic situation and consumer demand. March corn futures moved up 1.5 cents to $3.685/bushel as Friday dawned over Chicago, while May gained 2.0 cents to $3.7375.
Although soybean futures rebounded from Wednesday’s drop yesterday, bullish traders’ inability to sustain the midmorning challenge of Tuesday’s highs seemed to rob the market of upward momentum. One also has to suspect the industry is having a hard time interpreting recent Brazilian weather developments and their potential impact upon that country’s forthcoming crop. Still, the current equity and energy market rebound is almost surely inspiring greater optimism about the demand outlook. The crude oil bounce is directly supporting the soyoil market. March soybean futures rallied 4.0 cents to $8.825 Thursday night, while Mar soyoil climbed 40 points to 30.34 cents per pound and March meal edged up $0.90 to $273.10.
Despite burdensome global supplies, the elevated values of the US dollar and fierce export competition from Argentina and Russia, wheat futures rose yesterday and continued edging higher overnight. The fact that the greenback couldn’t sustain Thursday morning surge is probably encouraging bulls hoping for improved US export activity. The ongoing equity market rebound is probably spurring renewed optimism as well. Some speculators may also be anticipating a midwinter advance if/when a freeze scare in the US Plains or the Black Sea region develops. March CBOT wheat inched 1.0 cent higher to $4.76 per bushel in early Friday trading, and March KC wheat rose 1.25 cents to $4.7275, while March MWE stalled at $5.00 ¼.
Rallying equity markets supported cattle futures Thursday. The nearby contracts closed at limit up levels on the outside market strength. Global stocks and oil prices rebounded from weakness early in the week. The uptick triggered short covering, as investors adjusted their bearish bets. Argentina will now open its doors to beef imports on domestic shortage in steaks and burgers. It lifted restrictions on beef exports raising concerns that domestic beef may become scarce. Choice cuts are down 2.28 to 227.67, while Select cuts are down 1.06 to 223.08. Wholesale demand could take another hit as winter storms move up the East Coast. February live cattle rose 3.00 cents to 130.250 cents/pound on Thursday’s close, while April futures gained 3.00 cents to 131.175. March feeder cattle moved limit up 4.50 cents to 154.225 cents/pound and April feeders gained 4.48 cents to 154.450.
Spot market gains were seen as reflecting strong pork demand Thursday, helping boost futures prices. Likewise, solid packer margins have processors taking as many hogs in to take advantage of the profitable margins. New Chinese environmental rules are reportedly shutting down or moving hog farms, which may ultimately spur its demand for imported pork. Lean hogs found support in the front months but weakened in the deferred contracts. February hog futures closed 1.02 cents/pound higher at 63.75 cents/pound Thursday, while April hogs increased 1.95 cents to 69.025 cents/pound.
Although recent talk of potential Chinese sales out of official government stocks and cheaper manmade 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 0.44 cents to 62.53 cents/pound early Friday morning, while May cotton ran up 0.39 to 62.85 cents/pound.