The corn markets were lower to start the week after rallying 3.8% last week, up 14 cents. News that the ECB is willing to add more QE, if necessary, helped the dollar higher overnight after falling sharply last week in response to the disappointing stimulus announcement by the ECB. Next Tues/Wed, Dec 15-16, the Fed is expected raises rates, particularly after Friday’s solid jobs report. The USDA’s WASDE will be released Wednesday and, while yield and production data will not be included until the January final report, the trade will watch for revisions to the demand side of the balance sheet, domestic use and exports. China purchases of U.S. ethanol during October soared to 32.6 million gallons, its biggest ever monthly volume, increasing imports from the U.S. to a robust 43.5 million gallons so far this year. March corn futures were 2 cents lower to $3.795 early Monday morning, while May lost 1.5 cents to $3.8575.
Soybean futures climbed for the 5th day in a row on Friday. Futures finally broke back through the $9 a bushel resistance as short covering supported trading. Soy Oil helped the cause gaining 4% as traders anticipated a US biodiesel tax credit implemented for producers instead of blenders. Bean oil found support over the 200 day moving average on technical buying for the January contract. Soymeal lost ground today as traders exited long soymeal/short soy oil spreads. Soybean found support from USDA’s report that 15.7 mil bu if US soybeans were sold for 2015/2016 with 6.5 mil bu going to China. 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. January soybeans closed up 8 ½ cents to $9.06 on Friday. Jan soy-oil closed up 121 points to 32.08, while Jan meal finished weaker down $2.00 to $284.90.
Wheat futures continued its upward movement even as the dollar took back some of its losses from Thursday. Bargain hunting and short covering supported the 2 day movement as prices hit multi year lows mid-week. Non-commercials added an additional 24,000 short positions this past week. 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. Thursday’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 push March wheat is still near contract lows, weighed by better than expected US winter wheat conditions and ample global stocks. 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. Statistics Canada released its December Crop Production report this morning. Total wheat production declined 6.2%, for the year, to 27.6 million tonnes in 2015 but still larger than October’s estimate of 26.1 million tonnes. While harvested area edged up from 2014 to 23.7 million acres, average total wheat yield declined 3.3 bushels per acre from a year earlier to 42.8 bushels per acre in 2015. March CBOT wheat futures gained 5 ¾ cents to $4.84 ½ /bushel on Friday, while Mar KC wheat gained 4 cents to $4.80 ½, and March MWE gained 3 ½ cents to $5.15 ½.
Although nearby live cattle futures posted fresh contract lows Thursday, the late-day rebound suggested a technical reversal might be in the offing. However, the midweek cash market drop, as well as the persistent beef cutout losses posted yesterday afternoon and again at noon today gave bulls little support for a sustained rebound. Thus, December futures settled just above a new contract low, while the most-active February future managed a less substantial loss. Electronic trading losses after the official close seemingly bode ill for Monday’s opening. February live cattle sank 0.22 cents to 129.22 cents/pound at Friday’s close, while April futures actually rose 0.30 to 129.97. January feeder cattle slid 0.30 cents to 159.90 cents/pound and March feeders declined 0.50 cents to 157.30.
The recent bounce by the CME lean hog index, which CME futures actually cash settle against, is apparently losing its upward momentum, with the projected Monday quote rising just 0.17 cents to 57.30 cents/pound, at least partially explains the drop suffered by the expiring December contract today. Traders may also be concerned about the bearish influence of the traditional ham market breakdown during the holiday season (after grocers have completed their buying of Christmas and New Year’s dinner entrees). Nevertheless, the most-active February contract posted a slight gain, possibly in response to ideas that low hog and pork prices will elicit vigorous consumer demand in early 2016. February hog futures ended the week having inched 0.27 cents higher to 59.10 cents/pound, while the April contract inched up 0.07 to 63.220 cents/pound.
ICE cotton futures closed higher on Friday. Strong US exports and a weaker dollar helped support prices. Late harvest and weather damage, particularly in West Texas and Georgia, have trimmed high grade cotton stocks. US exported 287,100 480 lb bales of cotton last week. The highest total in the 2015/2016 marketing year. India 2015/2016 cotton production estimate seen at 28.5 mil 480 lb bales down from last year’s 29.6 mil as the farmers have finalized planting on 11.8 mil hectares. Yield is expected to rise though to 527.49 kg a hectare from 493.77 kg last year. March cotton traded above the 200-day moving average Monday and has found a small support holding it just slightly above the average. 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 advance 0.75 cents to 64.70 cents/pound Thursday, while May cotton gained 0.61 cents to 65.23.