CORN HIGHLIGHTS: Corn futures lost ground today, finishing 3-1/2 to 5 cents lower with Mar leading today's drop, finishing at 3.69-3/4. New crop Dec closed 2-1/2 lower at 3.96-3/4. Weaker soybeans and a big drop-off in wheat prices seemed to be enough to keep corn prices on the defensive, which had traded higher in the overnight hours. Technical formations are looking iffy, with prices reaching their lowest level and closing at their lowest level since November. The negative reversal posted on 2/8, the release of the much anticipated USDA report, has had prices on the defensive since. While yield did drop more than most were looking for by 2-1/2 bushels per acre, a reduction in feed and ethanol usage may have spurred end user to take a more passive approach. Today's slide was partly due to technicals, as prices fell below last week's low and may have uncovered sell stop orders.
SOYBEAN HIGHLIGHTS: Soybean futures were under pressure throughout the session and finished with losses of 6-1/4 to 7 cents, as May led today's drop. Mar lost 6-3/4, closing at 9.00-3/4, off the low of 8.94-3/4. Today's low was the lowest level since mid-January. Prices managed to slide under a critical trend line, but clawed back above by the close. Techncials continue to look soft in soybeans. South American news offers little support, as weather is considered conducive. Elsewhere, additional African swine fever in China and lackluster demand for hog consumption could weigh on China's overall use of soybeans and soymeal. The close of new crop Nov under 9.50 was the lowest close since mid-January, with support in place at the 100-day moving average. Considering how weak beans looked at one point today, even though they did finish lower (unlike the wheat and corn markets) beans finished toward the middle of their daily trading range.
WHEAT HIGHLIGHTS: Wheat futures had another rough session with sharp losses of 14-3/4 May Chi to 16-1/4 May KC and 17-1/2 lower in Mar Mpls. Declining world wheat prices and a poor technical picture with prices slicing into new lows today, uncovering sell stops, all added to today's losses. Over the last eight sessions, front month Chi has lost over 35 cents. It is said that Ukrainian, Russian and French wheat values are all down hard and cutting into U.S. export potential. We have argued all year that we expect export business to pick up, and instead, we are seeing prices come down elsewhere and cutting into our potential. This could change quickly, and the market could be violent. Right now, a somewhat unexpected turn for wheat prices is the world not trying to aggressively purchase wheat and instead seems to be buying just in time inventories at the cheapest market, waiting it out as values weaken. Export inspections at 13 million were a disappointment.
CATTLE HIGHLIGHTS: Cattle markets had a strong start to this short week, with the live cattle futures markets extending their rallies. The nearby Feb live cattle contract closed 1.25 higher to 127.87, Apr closed 1.27 higher to 128.45, and Jun closed 52 cents higher to 118.60. Mar feeders were up 1.15 to 143.75, and Apr feeders were up 77 to 146.00. Choice beef values closed 54 cents higher on Monday afternoon to 217.39 and were up another 87 cents this morning to 218.26. Select beef was up 2.01 at yesterday's close to 213.00, and jumped another 1.74 this morning to 214.74. The strength in beef values was the largest source of support today. However, with a narrowing choice/select spread, be warned that this is not as supportive as higher quality cuts gaining in relation to the lower quality cuts. The Jan Cattle on Feed report will be released Friday afternoon. The market is expecting a marketings number at 99.7%, a placements number at 101.4% and on feed at 102.2%. The best traded Apr live cattle contract made its highest close yet. Prices still have yet to break through the highs made on the day of the bearish key reversal, but the trend is still higher. Jun futures took out their contract highs today on the way to a new higher close as well.
LEAN HOG HIGHLIGHTS: Hog futures began the week with an extremely negative day, with all contract months out to August, finishing the day limit lower. Apr hogs closed at 56.52, Jun hogs closed at 73.72, and Jul hogs closed at 77.02. Carcass cutout values were down 1.45 yesterday afternoon to 61.58 and were down another 56 cents today to 61.02. This is the lowest carcass value since late 2009. Production last week came in 5.7% ahead of last year's pace despite expectations for an increase of only 2-3% above last year's pace. African swine fever in China has stifled a large amount of demand. ASF contaminate pork has been sold by eleven different brands in China, and while this is not harmful to people, a large animal breeding group has asked people to not buy pork products to avoid spreading ASF through kitchen waste to more farms. Pork consumption in the northern regions of China had declined 20% from the fourth quarter of 2018. Apr futures made new contract lows today, and the Jun contract month made new lows for the move. Jul futures are still above near term lows. The Jul contract does have a double bottom formation at 76.15, which may hold some support. Near term direction looks lower due to heavy supplies domestically and a lack of foreign demand.