The grain markets fell sharply Monday with corn futures down nearly 5%. Crude oil and the U.S. dollar also both lower. Equities extended last week’s losses, down 140 points. Mostly optimal weather continued over the weekend with rains falling in western Corn Belt and extreme heat is absent from the forecast. The very timely rains and absence of too much heat may keep pressure on futures in the near term. Corn export inspections came in at 1.108 million tonnes, higher than the trade estimate of .800-1.025 million tonnes. The trade is expecting the corn crop condition rating to increase from 69% in today’s crop progress report. September corn futures fell 19.5 cents to $3.73/bushel at the close Monday, while December lost 19.25 to $3.835.
The soy complex extended Friday’s losses on Monday as favorable weather seems to be helping form a consensus that the impact to production from the excessive rains over the last few months may not be quite as severe. Soybean export inspections were 120,413 metric tonnes, on the low range of the 110,000-225,000 trade estimate. China has been buying new crop beans as of late but broader concerns about global economic problems and how that will impact demand are adding resistance. The trade is expecting a soybean crop condition rating increase from 62% in the 3:00 PM crop progress report today. August soybeans lost 30 cents to $9.6125/bushel late Monday, while August soyoil dropped 0.37 cents to 30.11 cents/pound and August meal fell $10.6 to $344.2/ton.
Wheat futures tumbled Monday, continuing their losses from Friday and joining the broad losses throughout the grain markets. Wheat export inspections were 439,330 tonnes, compared to last year at 489,089 and higher than the trade estimate of 200,000-400,000. Wheat harvest is gaining momentum in the EU and analysts expect French output between 37.5 to 38.0 million tonnes, compared to 37.5 million tonnes last year. Russia will reportedly harvest at least 100 million tonnes; ruble weakness is further undercutting U.S. wheat prices. September CBOT wheat futures closed 9.25 cents lower at $5.025/bushel Monday, while Sep KC wheat sank 8.25 cents to $4.9925/bushel, and September MWE stumbled 8 cents to close at $5.37.
Cattle futures traded mixed on Monday with the nearby slightly higher and the deferred months lower. Nearby cattle are trading 10 cents below the 100-day moving average of 153.91 cents/pound and are at 13-month lows. Friday’ Cattle report showed high price and beef production profitability has led to expansion. The report generally fell in line with expectations. Seasonality and what appears to be an oversold condition might suggest a bottom in the last weeks of July. August cattle gained 0.22 cents to 143.02 cents/pound Monday, while December futures declined 0.95 to 146.10. Meanwhile, August feeder cattle futures slipped 1.17 cents to 208.50 cents/pound, while November feeders fell 2.10 to 202.87.
Hog futures dropped on Monday after also ending lower last Friday. Nearby hogs are trading at only a slight discount to cash, narrowing the spread between the lean hog index and near month contracts. Hogs are hovering above the 100-day moving average of 73.69 by nearly 4 cents. Early Augusts may bring the seasonal demand surge in preparation for another major U.S. holiday. Macro concerns related to global demand could also be weighing on the hog market. August hog futures slumped 0.12 cents to 77.52 cents/pound Monday, while December lost 0.57 cents to 60.67.
ICE cotton futures were also down just after dawn on Monday as prices remain in the doldrums. Perhaps the new “world cotton contract” that will be reportedly introduced this fall by ICE (Intercontinental Exchange), based in Atlanta, GA. This new contract may help alleviate the supply conundrum the cotton market faces by enabling structurally more efficient trade flows across a global platform. In the meantime, it feels like cotton will be relegated to a narrow range, merely trading on FX relationships, notably the U.S. Dollar, and on technicals. Stock market weakness may also hurt apparel demand. December cotton futures slipped 0.39 cents to 64.25 cents/pound at Friday’s ICE settlement, while May lost 0.36 cents to 64.30.