Corn futures were neutral-lower early Tuesday morning after hitting new contract lows yesterday on improved rainfall in Brazil. Weekly corn export inspections were at 22.5 million bushels, below the 36.5 million bushel weekly target needed to meet the USDA’s 1.750 billion bushel export projection for the marketing year. Argentine exports continue to threaten US exports, putting pressure on futures, but weather in the same continent also has potential to drive production lower, creating upside. Funds were net sellers of 5,000 corn contracts on Monday. Dalian corn fell from four-month highs on Monday after China’s top leaders met last week to map out rural development plans for 2016, increasing expectations that Beijing may increase sales of its record corn stockpile. March corn futures were 0.75 cents lower at $3.6025 early Tuesday morning, while May lost 1.25 cents at $3.665.
Soybean futures firmed Tuesday morning on short covering ahead of year-end after testing lows Monday in responses to much-needed moisture in Brazil’s weather forecast. Rains fell over the weekend in Mato Grosso, easing yield concerns in the world’s largest exporter of soybeans, and weather models show more rain in the 10-15 day outlook. Weekly soybean export inspections were at 1.4 million tonnes, in line with the expected 1.3 to 1.5 million. Soyoil was supported by Malaysian palm oil futures that were higher Tuesday, touching an 18-month high on concerns production will be affected during the rainy monsoon season that can bring floods across Southeast Asia. Soybean futures move 6.5 cents higher to $8.715 early Tuesday, while Jan soyoil gained 28 points to 30.48 cents per pound and January meal gained $1.10 to $268.40.
Wheat futures moved higher Tuesday morning as heavy rain and flooding threatened soft winter wheat in the Midwest. Large areas of Texas, Arkansas, and Missouri received 3-7 inches of rain with some areas totaling up to 10 inches. Concerns of disease now increase, but the 10-day forecast is much drier. Soft red winter wheat accounts for about ¼ of total U.S. wheat production. Weekly wheat export inspections were at 305,472 tonnes, compared to estimates of 275,000-400,000 tonnes. Ukraine’s ag consultancy has raised their winter wheat forecast for 2016 to 17.8 million tonnes from 17.5 million because of a larger planting area. Still, they warned the 2016 crop would be less than the 2015 harvest of 23.4 million tonnes due to drought. March CBOT wheat futures gained 4.5 cents to $4.71 per bushel Tuesday, while Mar KC wheat was 2.75 cents higher to $4.6875, and March MWE climbed 3.25 cents to $4.95.
Live cattle futures fell Monday with light trading pressuring prices lower. Light buying support will keep the futures mixed to range bound as we near the end of the year. Indonesia will import roughly 600,000 head of live cattle. Imports will be quarterly with 200,000 head in the first quarter. Beef Cut Outs are up. Choice cuts were up 1.82 to 199.45, and select was up 3.06 to 192.53. Cattle slaughter for last week, was estimated at 402,000 head, compared to 590, head the prior week and 390,000 a year ago. Slaughter estimates for this week are 90,000 head vs 111,000 last week and 114,000 head last year. February live cattle declined 0.90 cents to 136.125 cents/pound Monday, while April futures dropped 0.775 cents to 137.250. January feeder cattle lost 0.750 cents to 162.725 cents/pound Monday, and March feeders declined 1.425 cents to 158.70.
Lean hog futures firmed Monday as traders bet on strong demand through January. Light buyer support through the rest of the year should keep prices steady limiting downside potential. Country hogs are down 0.26 to $47.79. Last Wednesday’s Hogs and Pigs report was neutral to slightly positive as most of numbers reported by the USDA were under the trade’s average estimates. Heavy weight hogs were shown to be 5% larger than a year ago while actual slaughter has been running 8% above a year ago, suggesting supplies could tighten the next few weeks. Hog slaughter last week was estimated at 1,701,000 head, vs 2,493,000 the prior week and 1,740,000 a year ago. Slaughter this week is estimated at 440,000 head vs 434,000 last week and 435,000 a year ago. February futures closed 0.70 cents/pound higher at 59.00 cents/pound Monday, while April hogs gained 0.80 to 65.875.
Cotton future were higher Tuesday ahead of the New Year holiday. India’s government purchases of cotton are set to plunge 89% in 2015/16 as local prices have surged after crop failures force neighboring Pakistan to raise imports from India, the world’s largest cotton producer. Increases in exports to Pakistan, Bangladesh, and Vietnam, will help India trim spending by $2B. Globally, cotton stocks remain extraordinarily high at 104 million bales (480 lb.), or nearly 50 billion pounds of cotton. That’s enough to make 127 billion t-shirts, or 17 for every person on earth, according to estimates from the National Cotton Council. This is driven by China’s stockpiling program, which has their stocks accounting for nearly 60% of world supply. March cotton moved .05 higher to 64.08 cents/pound early Tuesday, while May cotton gained 0.08 to 64.40 cents/pound.