The grain markets are down sharply to start the week early Monday morning. Crude oil and the U.S. dollar are also both lower. Mostly optimal weather continued over the weekend with rains falling in western Corn Belt and extreme heat is absent from the forecast. The very timely rains and absence of too much heat may keep pressure on futures in the near term. The trade is expecting the corn crop condition rating to increase from 69% in this morning’s crop progress report. September corn futures fell 11cents to $3.815/bushel early Monday morning, while December lost 11.25 to $3.915.
The soy complex extended Friday’s losses early Monday as favorable weather seems to be helping forming consensus that the impact to production from the excessive rains over the last few months may not be quite as severe. The trade is expecting a soybean crop condition rating increase from 62% in the 730 am crop progress report today. Brazil’s crush industry group, Abiove, expects to export 50.3 million tonnes of 2014/15 soybeans compared to 48.7 million tonnes in the June estimate. They also raised their record crop forecast from 93.7 million tonnes to 94.4 million tonnes. August soybeans lost 11.5 cents to $9.7975/bushel, while August soyoil dropped 0.34 cents to 30.14 cents/pound and August meal fell $3.6 to $351.2/ton.
Wheat futures fell lower in the early Monday morning session, continuing their losses from Friday and joining the broad losses throughout the grain markets. Wheat harvest is gaining momentum in the EU and analysts expect French output between 37.5 to 38.0 million tonnes, compared to 37.5 million tonnes last year. Russia will reportedly harvest at least 100 million tonnes. September CBOT wheat futures closed 9.75 cents lower at $5.1175/bushel Friday, while Sep KC wheat sank 9.75 cents to $5.0725/bushel, and September MWE stumbled 7.75 cents close at $5.45.
Cattle futures remained under pressure Friday. Country cattle traded $2.00-$3.00 lower last Thursday evening than they did late the previous week. That might easily have been construed as a fresh bearish indicator, but cattle futures posted only moderate losses. Friday’ Cattle on Feed report showed high price and beef production profitability has led to expansion. The report generally fell in line with expectations. Seasonality and what appears to be an oversold condition might suggest a bottom in the last weeks of July. August cattle slid 0.32 cents to 143.02 cents/pound in late Friday action, while December futures declined 0.42 to 147.05. Meanwhile, August feeder cattle futures slipped just 0.10 cents to 209.67 cents/pound, whereas November feeders surged 0.95 to 204.97.
Hog futures proved unable to sustain their midweek gains Friday. Although the CME price of the past two days seemed to set the stage for follow-through gains, bulls couldn’t sustain the hog market’s upward momentum today. That almost surely reflected continued slippage in the CME lean hog index (now estimated at 78.72 cents/pound) as well as lower midsession cash market quotes. Bears apparently expect further short-term weakness despite firming pork quotes. August hog futures slumped 0.60 cents to 77.67 cents/pound at their Friday close, while December sagged 0.23 cents to 61.52.
ICE cotton future were also down just after dawn on Monday as prices remain in the doldrums. Perhaps the new “world cotton contract” that will be reportedly introduced this fall by ICE (Intercontinental Exchange), bases in Atlanta, GA. This new contract may help alleviate the supply conundrum the cotton market faces by enabling structurally more efficient trade flows across a global platform. In the meantime, it feels like cotton will be relegated to a narrow range, merely trading on the FX relationships, notably the U.S. Dollar and on technicals. December cotton futures slipped 0.39 cents to 64.25 cents/pound at Friday’s ICE settlement, while May lost 0.36 cents to 64.30.