Grains Drop on Harvest North of Border

Lower prices for physical cattle sent the futures market lower on Wednesday.

The U.S. Department of Agriculture said that meatpackers paid from $117 to $118 per 100 pounds on a live basis and $187 dressed for slaughter-ready cattle on Wednesday, adding to sales averaging $189 dressed and $119 live a day earlier. No cattle traded at the online Fed Cattle Exchange auction on Wednesday morning.

Cash prices were below last week’s averages of $120.50 live and $190 dressed, and analysts expected the cash market to continue lower through the week.

Those prices were nevertheless at a premium to futures, which have fallen sharply in recent days as speculative investors like hedge funds pull away from bets that cattle futures would rise.

December live cattle contracts fell 0.5% to $1.159 a pound at the Chicago Mercantile Exchange on Wednesday, down 4% since they started trending lower last week.

Some traders are concerned that demand for beef will not be able to keep up with the large numbers of cattle being fattened for slaughter in the first half of next year. A series of government reports have shown feedlots placing more cattle on-feed for fattening than expected.

In particular, they say beef prices have not held up in the face of growing supplies. Wholesale beef fell $2.26 to $206.82 per 100 pounds as of midday Wednesday after rising earlier this week.

Hog futures also fell, dragged lower by speculative selling in the cattle market. CME December lean hog contracts slid 0.7% to 63.825 cents a pound.

Wholesale pork prices fell $1.34 to $83.44 per 100 pounds. Cash prices have started the week mixed, and were expected steady to lower in Wednesday’s trade.

Grain and soybean futures turned lower Wednesday, with wheat prices leading losses on larger-than-expected Canadian harvest estimates.

Canada’s statistics agency said wheat farmers produced 30 million metric tons in 2017, above pre-report estimates and the agency’s previous figure. That was down 5.5% from last year, however.

Analysts said the extra Canadian wheat would likely add to exports, exacerbating oversupply in a global market burdened by an excess of grain. U.S. wheat farmers are struggling to compete with increasing production in Russia, the European Union and elsewhere.

Soft-red winter wheat futures for December fell 1.9% to $3.98 1/2 a bushel at the Chicago Board of Trade. Contracts for Minneapolis spring wheat and Kansas City hard-red winter wheat were also lower.

Outside markets added to the selling pressure on Wednesday. The WSJ Dollar Index, which tracks the U.S. dollar against a basket of other currencies, rose 0.2% to 86.94. That made agricultural exports, particularly wheat, less attractive to foreign buyers. Crude-oil prices fell, pressuring the broader commodity sector.

Soybean and corn futures followed wheat lower despite ongoing concerns about crop conditions in Argentina.

An increasing number of meteorologists say a La Nina weather pattern has formed, according to brokerage Allendale Inc., which could result in lower South American production.

There is a chance of rain in Argentina in 11 to 15 days, the Commodity Weather Group said, but otherwise around 40% of the corn and soybean crop will be dry through the middle of December.

CBOT January oilseed contracts slid 0.6% to $10.02 3/4 a bushel while December corn dropped 0.2% to $3.39 1/4 a bushel.

Oil prices fell to a three-week low on Wednesday after government data showed a steep rise in U.S. fuel inventories.

Light, sweet crude for January delivery fell $1.66, or 2.9%, to $55.96 a barrel on the New York Mercantile Exchange, the largest one-day dollar drop since July. Brent, the global benchmark, lost $1.64, or 2.6%, to $61.22 a barrel, closing at a one-month low.

Gasoline futures fell 3.3% to $1.6609 a gallon and diesel futures lost 2.7% to $1.8613 a gallon.

Natural gas prices closed higher on Wednesday on colder weather forecasts and expectations that stockpiles declined last week.

Futures for January delivery settled up 0.8 cent, or 0.3%, to $2.922 a million British thermal units on the New York Mercantile Exchange, following a two-day losing streak.


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