Corn: Corn futures were solidly lower on Thursday. Favorable crop weather and forecasts for generally good conditions over the next week or two put the market on the defensive. Losses were extended by strength in the dollar and weakness in crude oil. The market was underpinned at times by the strong weekly export sales report released this morning, but losses were extended ahead of the holiday weekend. September closed 10 3/4 cents lower at $3.45 3/4 and December was 11 3/4 cents lower at $3.57 1/2.Soybeans: Soybean futures settled lower on Thursday. Profit-taking after the strong gains on Wednesday pushed prices lower. Other bearish factors include the generally favorable growing conditions, strength in the dollar and losses in the stock market and crude oil. Losses were limited by more business reported to China in the weekly export sales report. USDA also announced a 24 million bushel sale to China for the 2009/10 crop year in its daily reporting system. August ended 6 1/2 cents lower at $11.54 and November was 9 1/2 cents lower at $10.06. Wheat: Wheat futures closed lower on Thursday. Seasonal harvest pressure, strength in the dollar and sluggish export demand weighed on the market. Weekly export sales reported this morning of 8.9 million bushels were below trade expectations. However, losses were limited by traders evening positions ahead of the three-day holiday weekend and weather forecasts for some harvest delaying rains this weekend and early next week. CBOT Sep ended 6 1/2 cents lower at $5.29, KCBT Sep was 9 1/4 cents lower at $5.64 1/4 and MGE Sep closed 11 cents lower at $6.22 1/2.
Cattle futures were lower on Thursday. The August contract was $.88 lower at $84.88. October cattle were $.55 lower at $90.22. August feeder cattle were $.32 lower at $103.45.
There were reports of cattle trading in Kansas at $83, up $1 from last week. Similar bids were reported across other parts of the Plains, but no trade has been reported so far.
The negative sentiment in cattle futures on Friday stemmed from another employment report showing large job losses and rising unemployment. The Labor Department reported that payrolls fell by 467,000 in June causing the unemployment rate to climb to 9.5%. Job losses were greater than expected. Even though some leading indicators are showing signs of improvement in the economy, job losses are mounting. Since the recession began in December 2007, 6.5 million jobs have been shed.
Monday’s sharp rally still dominates the price charts.
Prices are at risk of a near-term setback, but this week’s strong rally is a decisive move higher suggesting that the summer lows are probably in place and the market should be headed higher from mid-summer into the fall.
August futures have broken the sideways to lower trend that has been in place through most of 2009. August is now hovering just below chart resistance in the $85.80 to $86.40 range. The recent low near $80 basis the August contract should offer solid support. Beef prices continue to drift lower. Beef prices are lower than before this week’s rally in cattle futures began. Stronger beef prices are needed to reinforce the recent bullish action in cattle futures.
Hogs - Daily Commentary
Lean hog futures closed mostly higher on Thursday after being all over the map in light pre-holiday trade. As was the case on Wednesday, most of the activity was related to position evening, and markets were more volatile than usual with many traders already gone for the long weekend. Commodity markets are closed on Friday. The sharp drop in the stock market was one factor putting downward pressure on hog futures, but a surprising bounce in cash prices provided support. There seems to be sentiment that hog supplies will be lower come next week. The October contract closed at $57.18, up 25 cents from Wednesday’s close. December ended $1.05 higher at $58.25.
Cash hog prices were surprisingly strong on Thursday even with packers’ margins continuing to worsen. The cutout value declined on Wednesday and is now down $1.50 from last Friday’s level. Meanwhile cash hog prices have edged up a little and packer margins are about as bad as they have been since March. With packers losing money on every hog processed – it is a little hard to see why they raised bids on Thursday. Cash prices are expected to be mostly steady on Monday, but higher prices are possible in some markets.
