Corn futures were neutral-higher early Tuesday as funds position ahead of the WASDE, weighing a myriad of opposing factors. Factors adding pressure are the Fed’s expected rate hike (likely boosting the dollar and hurting prices), larger than expected U.S. production, the WTO’s $1B ruling against the U.S., corn exports which lag 25% behind last year, and the new Argentine government taking office Thursday. Supportive factors include the EPA’s higher RFS mandate, S. American weather, and record Chinese ethanol demand. The Dow closed 117 points lower Monday, while the Shanghai Composite fell 1.9% at their Tuesday afternoon close. The dollar was .06% lower at 98.59 and while gold and crude also moved lower. Crude oil is now near 7-year lows, falling over 50% in the last 18 months. March corn futures were 8.5 cents lower to $3.73 Monday morning, while May lost 8.5 cents to $3.7875.
Soybean futures weakened overnight after falling 23 cents Monday on profit ahead of the Supply/Demand report and on the lower soyoil from the rout in energy. The average trade estimate for world soybean ending stocks came in at 82.64 million tonnes while the U.S. soybean ending stocks estimate was reported at 462 million bushels. Weekly soybean export inspections were above expectations at 1.72 million tonnes, compared to the estimate of 1.45 to 1.70 million tonnes. In two days, the new Argentine government will take office, reported erasing 5% from the soybean export tax. Friday is the deadline for the looming U.S. government shutdown while next Tuesday and Wednesday is the Fed rate decision. January soybeans were 1 cent lower to $8.8125 early Tuesday, while Jan soyoil lost 0.28 to 30.297 cents per pound and January meal gained $1.0 to $279.00.
The losses in Wheat futures Monday were modest compared to broader losses in commodities. Crude oil breaking below 38 dollars helped feedgrains lower after OPEC decided on Friday to keep its production ceiling at around 30 million barrels a day. Oil has now lost more than 50% in the last 18 months. Movements in the dollar, up 0.3% Monday, continues to be a key focus in order to bolster U.S. exports, with the trade keenly attuned to the Fed’s rate decision next week. Despite gaining 1.6% last week, wheat remains near contract lows, driven largely by the lowest wheat exports since 1972. Russian export prices fell last on larger supplies from the current crop, increased freight rates, and fewer expected risks to next year’s crop. March CBOT wheat futures lost 1.75 cents to $4.8275/bushel Monday, while Mar KC wheat fell 5.75 cents to $4.745, andMarch MWE slid 6 cents to $5.095.
Ideas of a possible signal higher after Friday’s new contract lows were dashed Monday as live cattle futures dove another 2%. Boxed beef cutouts were mixed with choice 0.10 higher to 202.70 and select down 0.97 to 190.52. Cattle slaughter for the week was at 110,000 head, compared to 110,000 last week and 112,000 a year ago. Last week’s slaughter was at 560,000 head, 0.6% lower than a year ago. With higher carcass weights, beef output last week was at 473 million pounds, up 2.0% higher than a year ago. Abundant beef supplies are putting pressure on retail beef. February live cattle sank 2.45 cents to 127.15 cents/pound at the close Monday, while April futures lost 1.77 to 128.45. January feeder cattle moved 3.95 cents lower to 156.45 cents/pound and March feeders declined 4.15 cents to 154.07.
CME lean hog futures broke below 57.40 support level Monday after the Feb contract rallied above that level the previous four session. The move lower suggests the recent rally was short-lived and futures may tumble yet lower. While high turkey prices have strengthened ham demand during the holiday season, larger supplies have outweighed even the record decrease in pork stocks from the October cold storage report. Also influencing trade psychology was the World Trade Organization (WTO) ruling today granting Canada and Mexico more than $1 billion in retaliatory tariffs against the U.S. following a seven-year dispute over country-of-origin-labeling (COOL). Hog slaughter for the week was at 438,000 head, compared to 438,000 last week and 431,000 a year ago. February hog futures moved 1.7 cents lower to 57.52 cents/pound, while the April contract lost 1.92 to 61.65 cents/pound.
ICE cotton futures were lower Tuesday as investors position ahead of the WASDE report. The trade will look for revisions to cotton exports/domestic use this Wednesday in the WASDE. The Nov WASDE estimated 2015/16 domestic use at 3.7 million bales and exports at 10.2 million bales Last Thursday weekly export sales report showed sales of 287,100 bales of upland cotton and 2,400 bales of Pima cotton sold. The cotton crop progress report for the week ending Nov 29, showed the U.S. total cotton harvest at 80% complete, compared to 70% last week and the 88% five-year average. Texas cotton harvest, the largest cotton producing state in the U.S., was at 75% complete compared to 60% last week and the 75% five-year average. Mar cotton fell 0.42 cents to 64.15 cents/pound early Tuesday, while May cotton lost 0.41 cents to 64.87.