Improved corn condition ratings, a mostly favorable weather outlook, are macro-economic uncertainties kept the grain markets under pressure in the overnight session after they lifted Tuesday in part due to a rebound in the U.S and Chinese stock markets. On Monday, the Shanghai composite index, which holds China’s biggest companies, fell 8.5%, losing hundreds of billions of dollars and stifling what appeared to be rebound from their steep losses three weeks ago. Monday marked the largest Chinese one-day equity percentage loss in over eight years reasserting concerns about corn export demand. September corn futures dropped 4.75 cents to $3.7025/bushel early Wednesday morning, while December lost 4.75 cents to $3.8075.
The soy complex traded mixed overnight after what has already been an eventful week, particularly for beans, which were down 30 cents on Monday and bounced 13 cents yesterday. While weather models continue to favor bean growth and development, it remains to be seen what the weather picture will look like for August, a crucial month for beans. The trade seems to be less worried about production losses and most focused on a potentially larger than expected harvest in spite of the excessive rains this year. The world’s largest soybean buyer, China, is reportedly behind on new-crop bean purchases due to letter of credit issues stemming from their weaker economy. August soybeans are neutral at $9.745/bushel early Wednesday, while August soyoil lost 0.29 cents to 30.37 cents/pound and August meal rose $1.5 to $346.7/ton.
Wheat futures also appeared to post a technical/pragmatic bounce Tuesday, with the strength exhibited by the soy complex apparently leading the way higher. Given the size of recent losses, the crop markets certainly seemed technically oversold. Moreover, bears proved unable to force the nearby winter wheat contracts significantly below the $5.00/bushel level, thereby appearing to open the door for today’s rebound. September CBOT wheat futures rallied 8.25 cents to $5.1075/bushel in late Tuesday trading, while Sep KC wheat advanced 5.5 cents to $5.0475/bushel, and September MWE moved up 3.25 cents to close at $5.4025.
Renewed optimism about the late-summer outlook seemingly powered big gains in cattle futures Tuesday. Moderate wholesale gains to start the week probably encouraged bulls, with widespread short covering in the wake of the recent breakdown likely exaggerating the rebound. The August futures’ advance may have been limited by the fact that last week’s country quotes were only slightly higher, but premiums in deferred futures showed traders were rather clearly thinking seasonally supportive factors will tend to boost prices after Labor Day. August cattle ended Tuesday having leapt 2.03 cents to 145.05 cents/pound, while December futures surged 2.27 to 148.37. Meanwhile, August feeder cattle futures rocketed up 2.50 cents to 211.25 cents/pound, while November feeders vaulted 1.67 to 204.90.
Hog futures followed the cattle market higher. Recent wholesale firmness has suggested improving pork demand. However, the concurrent July breakdown in beef and broiler prices appeared to create considerable doubts about the hog and pork complex’s upside potential. Today’s price action in beef values and especially the big cattle/feeder rally encouraged hog traders as well. August hog futures closed 1.95 cents higher at 79.47 cents/pound Tuesday, while December rallied 0.90 cents to 61.57.
Equity strength probably boosted ICE cotton futures. Bulls in the cotton pit have had little to smile about lately, since futures have struggled against short-term moving average resistance since turning lower last week. However, in contrast to last week’s late developments, the equity indexes staged a big comeback from their recent losses Tuesday. The implied prospect of firming apparel demand probably encouraged buying in the cotton market. December cotton futures jumped 0.80 cents to 64.60 cents/pound at their Tuesday settlement, while May lifted 0.64 cents to 64.72.