Corn futures began the day weak with traders anticipating Argentina plans to remove their 20% corn export tax. After the opening bell, corn took a turn to the upside following wheat’s surge. Technical buying kicked in after prices found support over the 10 and 20 day moving average of $3.71 ½. Lending support was the dollar falling from a 12 year high. The dollar was pressured from news out of Europe that the European Central Bank cut its interest rates by just 10 basis points, well below investor expectations. The move strengthened the Euro against the dollar. A weaker dollar will make US corn more competitive that it has been. Even though corn followed wheat up, corn lost ground as wheat surged over 2%. Wheat’s premium over corn corrected after it hit the lowest level since 2013. Thursday the USDA reported corn export sales of 19.7 mil bu. Total sales are 672.4 mil bu, down 25% from last year’s 895.6 mil bu for the same period as last year. Weekly shipments are reported at 14.7 mil bu putting the marketing year total at 263 mil bu, down 28% from last year’s 335.1 mil bu. The USDA reported the largest weekly drop in ethanol production Wednesday that stunned investors, only a week after production exceeded 1 million barrels per day for the first time ever. March corn futures closed up 6 ¾ cents to $3.77 Thursday, while May also gained 6 ¾ cents to $3.82 ¾.
Soybean futures found technical support closing positive for the fourth straight day. Early morning pull back was enough to draw the bargain hunters out. A weaker US dollar helped build outside support for soybeans. Pressure from Argentina’s plans to lower their soybean export tax by 5% next Thursday has been offset by the increased demand outlook driven by the new biodiesel mandate. Argentina is also proposing to reduce the import tax on Soy, too. Currently most crushing plants are running at 70% during domestic growing periods. With a reduction in the export tax on meal and oil, Argentina could potential become an importer of soybeans during domestic growing periods. Thursday the USDA reported soybean export sales of 32.3 mil bu. Total sales are 1.211 bil bu, down 17% from last year’s 1.457 bil bu for the same period as last year. Weekly shipments are reported at 73.6 mil bu putting the marketing year total at 719.4 mil bu, down 4% from last year’s 671.7 mil bu. Some weather models are suggesting dryness in Brazil is becoming more widespread. January soybeans closed up 5 ¼ cents to $8.97 ½ on Thursday. Jan soy-oil closed up 30 points to 30.87, while Jan meal finished strong up $0.80 to $287.10.
Wheat futures surged Thursday as the US dollar lost ground against the Euro. Today’s higher close broke the seven session downfall as nearby contracts neared or traded multiyear lows. The dollar was pressured from news out of Europe that the European Central Bank cut its interest rates by just 10 basis points, well below investor expectations. The move strengthened the Euro against the dollar. Investors have taken a large short position betting on bearish prices. Selling was steady on this past week’s down trend growing the short position as the funds waited for any semblance of a bullish fundamental uptick. Today’s dollar weakness was just that uptick needed for funds to short cover their bearish bet. The rally being pushed higher on the technical buying. Even with today’s rally March wheat is still near contract lows, weighed by better than expected US winter wheat conditions and ample global stocks. The winter wheat condition rating came in at 55% good-to-excellent, from 53% last week and 58% last year. Thursday the USDA reported wheat export sales of 15.9 mil bu. Total sales are 532.0 mil bu, down 14% from last year’s 622.2 mil bu for the same period as last year. Weekly shipments are reported at 14.7 mil bu putting the marketing year total at 365.9 mil bu, down 17% from last year’s 425.7 mil bu. The Canadian crop production report will be released Friday at 7:30 a.m. CST. March CBOT wheat futures gained 11 ½ cents to $4.78 ¾ /bushel on Thursday, while Mar KC wheat gained 10 ½ cents to $4.76 ½, and March MWE gained 3 ¼ cents to $5.12.
Live cattle futures tumbled finding pressure for the second straight session as selling persisted below the 10 and 14 day moving average. Today’s session was choppy but ultimately moving lower. Nearby contracts posted new lows in response to the weak cash prices. Traders are having a hard time finding packers processing at full capacity over the Christmas and New Year’s holiday. Weakness in the Live Cattle market and higher corn prices pressured Feeder Cattle lower for the day. Weather conditions are also causing selling delay with ice and rains extending from the Panhandle region north through the Midwest. Wholesale choice grade beef prices gained 1.38 to 205.46 and select gained 1.01 to 193.26. First notice against the Dec contract is next Monday the 7th. Cattle slaughter for Thursday is estimated at 110,000 head vs 110,000 head a year ago. Week to day is estimated at 433,000 head vs 331,000 last week and 439,000 last year. February live cattle closed down 1.60 cents to 130.025 cents/pound Thursday and April futures declined 1.15 cents to 130.325. January feeder cattle closed down 1.00 cents lower to 159.725 and March feeders declined 0.90 cents to 157.70.
Lean hog futures closed down on Wednesday after sharp peak and valley trading on the session day. Cash hogs are trading steady to higher as packers’ margins remain solid. The average packer margin on Wednesday is $36.30 per head, though lower than the last week, continues to keep demand high especially ahead of Christmas and New Year’s holidays. Higher margins are supporting higher slaughter numbers. Wednesday’ slaughter was down 3,000 head from last week to at 437,000 head vs 430,000 from a year ago. Week to date slaughter is 1,313,000 head vs 1,318,000 last week and 1,288,000 from a year ago. The discount of the lean hog index to futures weighed on nearby contracts with February and April both lower while ideas of lower supplies in the longer term, as evidenced by lower frozen inventories, supported the deferred months. Country hogs were up 0.32 to 51.65. February hog futures closed down 0.75 to 59.025 cents per pound and April hogs closed down 0.775 to 63.350 cents/pound.