Corn futures slipped Monday night. Current Midwest U.S. growing conditions remain quite conducive to a large fall harvest, which is exerting persistent pressure upon futures values. For example, in contrast to the usual midsummer decline in condition ratings on the weekly USDA Crop Progress report, the latest good-excellent reading rose one point to 70% yesterday. The decline may have been limited by the overnight bounce in equity indexes and by news of a sizeable corn sale to South Korea. September corn futures were steady at $3.73/bushel shortly after sunrise Tuesday, while December edged 0.25 lower to $3.8325.
The soy complex posted a moderate overnight rally, which probably reflected the outcome of the Crop Condition report. Although the national good-excellent reading came in unchanged at 62%, industry analysts were reportedly expecting a 1% improvement. Moreover, conditions in the eastern Corn Belt reportedly declined, thereby reflecting the damage done by unrelenting spring rains. The soyoil rise was rather impressive, since both palm and crude oil values declined overnight. August soybeans bounced 10.0 cents to $9.7125/bushel Monday night, while August soyoil rose 0.12 cents to 30.23 cents/pound and August meal gained $3.8 to $348.0/ton.
Wheat futures seemed to follow soybeans higher despite favorable readings on the Crop Progress report. The weekly report noted a slight improvement in the spring wheat condition rating and a strong pace for the winter wheat harvest, which might easily have depressed prices last night. The fact that the various contracts rose moderately looks striking in that light, especially with corn futures trading around unchanged levels. The fact that the U.S. dollar also bounced Monday night wasn’t helpful either. Bulls may simply be buying after winter wheat futures held around the $5.00 level yesterday. September CBOT wheat futures rallied 5.25 cents to $5.0775/bushel in early Tuesday trading, while Sep KC wheat advanced 6.25 cents to $5.055/bushel, and September MWE moved up 6.25 cents to close at $5.4325.
Cattle futures traded mixed Monday with the nearby slightly higher and the deferred months lower. The nearby contract is at 13-month lows and may be vulnerable to further losses. Friday’ Cattle report showed high price and beef production profitability has sparked industry herd expansion, with the monthly Cattle on Feed report indicating a modest rise in the feedlot population and likely second-half supplies. However, the afternoon wholesale report stated moderate Monday beef gains, which may bode well for today’s opening. 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.
ICE cotton futures rose modestly overnight despite the fact that the latest rating on the Crop Progress report indicated the domestic fiber crop remains in good shape. The rating remained at 57% good-excellent for a third week, but that remains well above comparable year-ago and five-year average levels. The overnight bounce probably reflected renewed optimism about domestic demand in the wake of overnight equity index gains (rather than continued Chinese losses). December cotton futures rebounded 0.18 cents to 63.98 cents/pound early Tuesday morning, while May added 0.01 cents to 64.09.
ICE cotton futures were also lower 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 tradeflows 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 alsohurt apparel demand. December cotton futures slipped 0.89 cents to 63.75 cents/pound at the close Monday, while May lost 0.57 cents to 64.09.