Ag markets began the week in mixed fashion
BBJ Market Report
The crop markets are starting the week in mixed fashion. The energy sector breakdown dominated the financial markets last Friday, with corn and beans being affected by their biofuel connections. Corn futures are slipping again this morning, which may also reflect follow-through crude oil and ethanol price weakness, as well as talk that Chinese stocks have reached record highs. December corn futures dipped 2.0 cents to $3.7375/bushel Sunday night, while May sagged 1.75 to $3.9525.
The soy complex is decidedly mixed in early Monday action. Last Friday’s energy market dive weighed heavily upon soybean oil values, but the Asian palm markets had closed for the week. Their bearish reaction cycled into the soyoil market again last night. Meanwhile, nearby soybean futures are bouncing from technical support and the meal market is mixed to higher. Given the drastic nature of last Friday’s energy sector plunge, traders may be looking for at least a ‘dead cat’ bounce today. January soybean futures moved up 2.75 cents to $10.1875/bushel early Monday morning, while December soyoil fell 0.29 cents to 31.89 cents/pound, and December meal slipped $1.3 to $389.8/ton.
The wheat markets are trading mixed to higher. Wheat futures defied last Friday’s broad commodity sell-off in response to talk that Russian officials were tightening wheat export rules. This morning’s news of Russian price strength may be offering sustained support, so overnight CBOT slippage is doubly surprising, since U.S. SRW areas are getting freezing rain and sleet this morning. Friday afternoon beef strength and technical factors may spark a bounce on today’s opening. December CBOT wheat skidded 2.5 cents to $5.7475/bushel just before dawn Monday, while December KC wheat gained 3.0 cents to $6.40/bushel and December MWE wheat stalled at $6.21.
Feeder cattle rebounded and moved slightly higher last Friday, while live cattle futures proved quite mixed. USDA just recently raised its retail beef price forecast again for 2014 and predicted still further rises in 2015. Firming corn prices and a surge in supplies from the fall calf run may add further pressure to the market. Both cash and fed cattle futures may be vulnerable since packer margins are deep in the red despite soaring retail prices. December live cattle closed $1.225 lower at 168.92 Friday afternoon and Feb dove 1.6250 at 169.40. January feeder cattle futures dropped 0.55 to close at 230.825, while March feeders slid 0.275 to close at 229.65
Hog futures ended last week quite poorly. That may have reflected the massive energy sector breakdown, but traders may also have been reacting to ideas that the usual December slaughter surge will be exaggerated this year. Friday morning talk of cash and wholesale weakness may have exacerbated CME losses as well. However, the Friday afternoon quotes were decidedly firmer, which may bode well for today’s opening. December hog futures sank 0.30 cents to 90.65 cents/pound at their Friday close, but April hogs gave up just 0.05 cents to 91.60.
Cotton futures are also starting the week on a confused note. Talk that Indian producers had sold significantly less fiber to the government purchasing agency than they had last year, despite forecasts for a record harvest seemed to support the cotton market last Friday. Tight deliverable supplies may also be supporting the New York market. Conversely, the nearby contracts are facing significant technical resistance at slightly higher levels. March cotton futures rose 0.16 cents to 60.24 cents/pound shortly after sunrise Monday, while the July contract slumped 0.27 to 61.57.
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