After falling to a six-month low on Chinese and global economic concerns Monday, corn futures rebounded modestly in early Tuesday trading. The fact that the U.S. equity markets ended Monday on a firm note in the wake of a virtual collapse in the Chinese markets to start the week likely encouraged commodity traders, as did the overnight bounce in U.S. equity index futures. The recent price dip seems likely to spur short-term buying by both domestic and foreign interests. March corn futures bounced 2.5 cents to $3.5375 early Tuesday morning, while May moved up 2.5 to $3.60.
After also dropping on economic concerns Monday, soybean futures rallied in concert with the grain markets overnight. Forecasts for early-January rain across much of Brazil and the potential for relief for that country’s dry sow growing areas have also weighed on prices lately. Actually, the strength of the overnight soy bounce makes one wonder if Brazilian prospects for moisture look less promising at this juncture. March soybean futures rallied 5.0 cents to $8.61 in early Tuesday action, while Mar soyoil rose 0.06 cents to 30.18 cents per pound and March meal climbed $2.70 to $267.10.
Reduced fears about the global economic outlook after the overnight equity market rebound also encouraged bulls in the wheat markets. However, the fact that the U.S. dollar remained quite firm probably limited the size of the golden grain rebound, since U.S. grain has been struggling to compete in the global market for months. On the other hand, a wire service story about the persistent threat of winter cold to Northern Hemisphere wheat unprotected by snow appeared to boost prices as well. March CBOT inched up 0.75 cent to $4.59 per bushel shortly after dawn Tuesday, while Mar KC wheat gained 2.0 cents to $4.5625, and March MWE added 2.5 cents to $4.8725.
Cattle futures were mixed as live cattle weakened and feeder cattle found strength. Live cattle futures fell 18% last year, wiping out nearly all the gains from 2014. The strong dollar, underpinned US Beef exports, which are estimated to be a 6 year low in 2015, while imports are at a 10 year high. Cold weather the last 2 weeks helped support prices off lows that potentially would have futures down 30% for the year. Experts believe US beef production to increase by 1 billion lbs on lower feed costs and cow herd expansion started in 2015. The market strengthened early last week as retailers stocked up on steaks and roasts. The increase demand gave more incentive for packers to bid more aggressively in the cash markets. Nearby live cattle futures fell $30 per cwt in 2015. Beef cutouts jumped Monday; Choice cut leapt 4.07 to 216.66 while Select cuts soared 4.71 to 209.93. Cattle slaughter for last week end was estimated at 439,000 head vs 402,000 head the previous week and 455,000 the year before. February live cattle declined 0.525 cents to 136.275 cents/pound Monday, while April futures dropped 0.65 cents to 137.325. March feeder cattle increased 1.025 cents to 164.675 cents/pound Monday, and April feeders gained 0.825 cents to 164.350.
As one would expect, hog futures also turned sharply lower in concert with the equity markets Monday morning. The fact that everything on the Chicago board is trading at big premiums to current quotes for the CME lean hog index probably weighed upon prices as well. However, support at the February contract’s 40-day moving average held, thereby sparking a bounce. Late day reports also indicated significant cash and wholesale gains, which seemingly bodes well for today’s opening. February futures closed 0.37 cents/pound lower at 59.42 cents/pound Monday, while April hogs lost 0.50 to 65.45.
As one would expect, cotton futures suffered badly in Monday’s bearish stock market environment, since apparel demand is often seen as being very responsive to changing economic conditions. The fact that the economic fears were concentrated upon China probably exaggerated those fears. The fact that the U.S. dollar is also rising can’t be helping the bullish cause either, since greenback gains make U.S. cotton that much more expensive for export buyers. That at least partially explains the overnight cotton slippage. March cotton slid 0.07 cents to 62.54 cents/pound early Tuesday, while May cotton lost 0.11 to 63.35 cents/pound.