Monday's Closing Grain and Livestock Futures
Mar. corn closed at $4.27 and 3/4, up 4 and 1/4 cents
Jan. soybeans closed at $12.96 and 3/4, up 7 and 1/2 cents
Jan. soybean meal closed at $428.80, up $4.30
Jan. soybean oil closed at 37.87, down 47 points
Mar. wheat closed at $6.05 and 3/4, unchanged
Feb. live cattle closed at $136.82, up 52 cents
Feb. lean hogs closed at $86.62, down 5 cents
Feb. crude oil closed at $93.43, down 53 cents
Mar. cotton closed at 83.63, up 69 points
Jan. Class III milk closed at $20.06, unchanged
Feb. gold closed at $1,238.00, down 60 cents
Dow Jones Industrial Average: 16,425.10, down 44.89 points
For additional futures prices click http://www.farms.com/markets
Market News and Review
Soybeans were mixed on old crop/new crop spread trade. The near term supply remains tight and domestic and export demand both continue to look solid, supporting the nearbys, but deferreds were pressure by the longer term fundamentals. Crop conditions around South America are generally pretty good, with harvest underway in parts of Brazil, and the trade expects a big production estimate on Friday. Soybean meal was higher on product spread trade and talk that China rejecting U.S. DDGs could lead to increased bean meal demand. Bean oil was lower on those spread adjustments and the losses in crude oil.
Corn was higher on fund and commercial buying. Mexico bought 110,600 tons of 2013/14 U.S. corn, and weather’s limiting barge movement while leading to talk of increased feed demand. That said – there’s a chance for rain in dry parts of Argentina later on this week, and on Friday, USDA’s expected to report a record U.S. crop. Ethanol was higher. According to China’s Xinhua News Agency, Beijing rejected 610,000 tons of U.S. corn and corn products in 2013 due to GMO content. Bloomberg notes a shipment of corn from Ukraine arrived about the time reports of cancellations started going widespread.
The wheat complex was mixed, pretty much taking the path of least resistance. There’s some very cold weather around the U.S. with the potential for cold stress on the dormant crop in the Plains and Midwest. Unknown bought a total of 160,000 tons of 2014/15 U.S. wheat, 128,000 tons hard red winter and 32,000 tons soft red winter, and winter wheat planted area estimates are out Friday. Friday’s purchase of 535,000 tons of wheat Friday was their largest since 2010 and while it didn’t contain any U.S. wheat, that much wheat off the market at one time could be a signal of demand down the road. Algeria purchased 500,000 tons of optional origin wheat, which DTN says is probably French.
The main item of business in cattle country on Monday was the distribution of the new showlists. Ready numbers appear to be generally larger with only Kansas showing fewer steers and heifers. Although not well defined the asking prices are around 140.00 in the South and 222.00 plus in the North. The kill totaled 110,000 head, 20,000 less than last week and 15,000 head smaller than a year ago.
Boxed beef cutout values were higher on moderate demand and light to moderate offerings. Choice beef was up 1.21 at 205.54, and select was 2.28 higher at 201.38.
Chicago Mercantile Exchange live cattle contracts settled 5 to 52 points higher. The nearby contracts were supported by the intensity of packer spending over the last couple of weeks and bull spreading activity. Higher boxed beef cutout values at midday were also supportive to futures. February settled .52 higher at 136.82, and April was up .35 at 136.92.
Feeder cattle ended Monday’s trading session 40 points higher to 10 lower. Feeders fell from their highs of the day. Early week buying enthusiasm was tied to the premium status of the cash index which jumped nearly $2.00 as of January second. January settled .40 higher at 168.02, and March was unchanged at 168.10.
Feeder cattle receipts at the Oklahoma National Stockyards on Monday are estimated at 8,000 head. Compared to the last sale December 16th feeder steers opened 5.00 to 8.00 higher. Feeder heifers are lightly tested at steady prices. Steer and heifer calves are not well tested but a higher undertone is noted. Demand for cattle is very good following the holidays. Feeder steer calves medium and large 1 weighing 500 to 550 pounds traded from 209.50 to 211.00. 645 to 675 pound yearlings brought 185.00 to 194.00. Heifer calves weighing 535 to 600 pounds traded from 164.00 to 175.00.
Lean hogs settled 27 higher to 15 points lower with the front months pressured by the discounted cash business, lackluster action in the wholesale pork trade, and a general lack of buying interest. Nervousness about the destructive potential of PEDV continues to generally support deferred premiums. February was down .05 at 86.62 and April was .15 lower at 91.42.
There was slow hog market activity with light demand on Monday. Below zero temperatures and a major snowstorm affected plant operations and the movement of hogs. Barrows and gilts in the Iowa/Minnesota direct trade closed 1.48 higher at 79.48 on a carcass basis, the West was up 1.51 at 79.44, and the East was down .49 at 75.62. There was no test in the Missouri direct hog trade due to the winter storm. Terminal hogs were steady from 53.00 to 58.00. The Peoria market was not tested due to the extremely cold temperatures.
The pork carcass value ended the day .09 higher at 82.88 FOB plant on a negotiated basis.
Assuming that the Dec. 1 weight breakdown of market hogs is correct, weekly slaughter should consistently shrink over the next 60 days, leaving late-winter chain speed at least 200,000 below recent levels.
Monday’s hog kill was estimated at 323,000 head, 116,000 less than last week and down 105,000 from last year.