The grain markets were neutral-lower early Friday morning after rallying Thursday on short covering. March corn made its way back above the 3.73 support with resistance seen at 3.79. Argentina’s move to devalue their currency could make rallies tough to sustain as large amounts of their grain are expected to hit the world market between now and next April-May. Corn exports so far this year are at 736 million bushels, 23% lower than last year’s pace. A respected firm lowers corn planted acres estimate from 90.1 million acres to 88.9 million. Funds were net buyers of 8,500 corn contracts on Thursday. The Dow pointed to a lower open after losing 250 points Thursday, while gold was up and crude oil was down below $35. March corn futures were unchanged at $3.7425 early Friday morning, while May climbed 0.25 cents to $3.805.
Soybean futures moved lower Thursday morning after facing steep pressure from a higher dollar and lower currencies in Argentina and China, but rallied at midday closing up 14 cents. Lower than expected export sales and lower soyoil following news of a status quo biofuels blenders credit weren’t enough to keep futures from doing an about-face after being down 6 cents, moving higher at the close on short-covering ahead of the holiday week. Also supportive was the story gaining traction about the dry and hot weather increasing crop stress across the driest areas in Northern Brazil with only a few light showers. Support for Jan bean futures can be found at 8.44 and resistance at 8.76. The January contract moved 14.5 cents higher to $8.77 Thursday, while Jan soyoil lost 30 points to 30.07 cents per pound and January meal gained $6 to $275.90.
The wheat complex rebounded Thursday on short covering ahead of the holidays. During the day, however, Chicago wheat tested contract lows, breaking well below the 4.85 support to 4.72, just above the contract low of 4.66. Wheat export sales were 320,200 tonnes, in line with estimates. While global weather remains a supportive global variable, falling world currencies threaten prospects of rebounding US exports. The amount of snow in the Northern Hemisphere is said to be alarmingly low with temps 5-10 degrees Fahrenheit above normal, leaving winter crops vulnerable to the elements. The Baltic index fell to an all-time low of 471 points Tuesday, affirming weakness in shipping rates for dry bulk commodities and broader export frailty. March CBOT wheat futures gained 1.25 cents to $4.84 per bushel Thursday, while Mar KC wheat was lost 0.25 cents at $4.805, and March MWE advanced 2 cents to $5.0575.
February live cattle plummeted to fresh lows Thursday while, on a nearby continuous basis, futures sunk to three-year lows. Poultry and pork remain competitive retail alternatives, putting pressure on beef demand with an uptick not expected until early February. Yet this week, the Senate will decide whether to repeal the WTO ruling on COOL, or face up to $1B in tariffs. For Friday’s cattle-on-feed report, November cattle placements are estimated down 4.2% from a year ago, while on-feed cattle were estimated 1% higher and marketings up 2.7%. Cattle slaughter so far this week was estimated at 452,000 head, compared to 447,000 head last week and 438,000 a year ago. February live cattle lost 2.17 cents to 122.52 cents/pound at the close Thursday, while April futures lost 1.62 to 124.16. January feeder cattle fell 3.57 cents lower to 144.25 cents/pound Thursday, and March feeders lost 2.75 cents to 143.45.
Lean hog futures crashed nearly 4% Thursday, down for the fourth straight session, weighed by lower cash prices and the belief that increasing supply may send wholesale pork prices yet lower. Country hogs were .64 lower to 49.08 and the lean hog cash index fell .02 to 55.88, now near parity with nearby futures at 55.78. Hog slaughter this week so far was estimated at 1.758 million head, vs 1.754 million last week and 1.729 million a year ago. The next two weeks will be short production weeks and could signal higher production numbers the first week of year. Look for a bottom to form post-holiday, as low prices help reverse demand. February futures settled 2.15 cents/pound lower at 55.77 cents/pound at the close Thursday, while April hogs lost 2.35 to 61.52.
Cotton futures were higher early Friday morning. Although U.S. cotton ending stocks were lowered in the recent WASDE, global stocks are 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. Global stocks currently represent about 94% of world consumption, more than double the prevalent ratio during 1980-2010. This is due to China’s stockpiling, which accounts for nearly 60% of world stocks. Last week, U.S. cotton production was lowered to 13.03 mil (480 lb bales), down 2% from last month and down 20% from last year. Mar cotton moved .26 higher to 63.25 cents/pound, while May cotton gained 0.23 to 64.02 cents/pound.