The corn market continued its recent decline Thursday, due largely to growing ideas that high U.S. prices are rationing demand even more substantially than seems to be required by the current shortage. For example, Thursday’s weekly export data indicated the late-2012 sales pace is the slowest since 1987. The concurrent breakdown in wheat prices to six-month lows probably didn’t help the situation. Futures were mixed in overnight trading despite a report from China’s agency for controlling its grain reserves. They have apparently revised the anticipated addition to their stockpiles downward by about 10 million tonnes to 5.1 million. Chicago traders may have anticipated such a move. News that the International Grains Council forecast substantial increases in world corn and wheat production in 2013-14 probably depressed deferred futures. March corn inched 1/4 cent higher to $7.20 1/2 overnight, whereas the December 2013 contract fell 3 1/2 cents to $6.22 1/2 per bushel.
Soybean futures reacted strongly to the bullish results of Thursday’s export sales report, but gave back a substantial portion of the rise in early afternoon trading. The market surged again in overnight activity, following strong gains in India in early-morning trading. The source of that strength was not obvious. Whatever the cause, there was little question about its bullish impact, since the nearby contracts are threatening to break out above last week’s highs. January beans were 11 3/4 cents higher at $14.88 1/4 per bushel in early trading, while January oil had risen 0.55 cents to 49.55 cents/pound and January meal surged $3.8 to $459.1/ton.
Disappointment with U.S. wheat sales added to the downward pressure upon domestic markets again Thursday, with CBOT prices testing support at lows not seen since early summer. A March futures drop below the $8.00/bushel range might open the door to a more substantial breakdown in early winter. However, wheat futures apparently attracted fresh buying at recent lows and rose significantly overnight. The big soybean surge probably offered spillover support. March CBOT wheat rebounded by 5 1/4 cents in early-morning activity, while March KCBT wheat rose 3 1/4 cents to $8.66/bushel and March MGE futures jumped 4 1/4 to $9.04.
The cattle market remains greatly elevated due to persistent tightness of the supply/demand situation. Indeed, early-2013 futures are anticipating a surge to record highs, thereby reflecting expectations for seasonal and cyclical reductions in feedlot marketings. And while current cattle and beef demand remains historically strong, CME traders are apparently worried about the robustness of that buying. Slippage in choice beef values Thursday did nothing to ease those concerns. The December delivery situation isn’t clarifying the situation, especially after a large portion of Wednesday’s notices were reclaimed yesterday. Prices barely changed overnight, with February cattle rising 0.07 cents to 131.55 and April up 0.12 cents to 135.50 cents/pound.