Markets for December 26, 2016

Grain and soybean futures dropped to fresh lows Friday, extending losses in agricultural markets following quiet trade ahead of the Christmas holiday.

Soybean prices declined to a more than five-week low, buffeted by forecasts for more crop-friendly rains in Argentina, which have helped alleviate fears that dry weather would dent production in that country.

Prices for the oilseeds sank nearly 5% for the week, prompting traders to weigh whether the market is in for a prolonged slide that erases an earlier autumn rally. Although demand for U.S. soybean supplies has been robust so far this season, foreign purchases are expected to drop off in the new year as freshly-harvested South American rations come online, potentially depressing the market further.

Soybean futures for January fell 5 1/2 cents, to $9.89 a bushel at the Chicago Board of Trade, the lowest closing price since Nov. 16.

Corn prices drifted to a three-week low after trading in a narrow range on Friday. Losses in that market totaled nearly 3% for the week, as prices were weighed down by massive domestic and world supplies and a strong U.S. dollar, which is unfriendly for U.S. farm exports.

The dollar notched a fresh 13-year high against a basket of international currencies earlier in the week.

CBOT March corn futures slipped 1 1/2 cents, to $3.45 3/4 a bushel, the lowest settlement price since Dec. 2.

Wheat futures eased amid light trading volume, with prices for that grain dragged lower by lackluster demand and strong world harvests.
CBOT March wheat futures slid 3 1/2 cents,  to $3.93 1/2 a bushel.

Hog and cattle futures closed lower Friday after U.S. Department of Agriculture data signaled a surge in U.S. herds.

Meatpackers’ demand for hogs and cattle has been robust, thanks to favorable profit margins and heavy buying from foreign-based customers. That has helped support futures prices despite a growing glut of pork and beef coming to market.

February-dated lean hog futures closed 2.4% lower at 63.2 cents a pound Friday after trading as low as 62.27 cents a pound after the USDA data release. The slide largely erased the remainder of the past week’s gains, though lean hog futures remain about 24% higher so far this month.

Traders will be watching the market for signs that contract prices could soften further, after analysts warned this week that the lean hog market looked overheated given the massive numbers of animals coming to market.

Live cattle futures expiring in February declined 0.4% to settle at $1.163, slightly extending earlier losses after a separate USDA report showed feedlot owners putting 15% more cattle into commercial lots, versus a 12.5% increase forecast by analysts in a Wall Street Journal survey. The number of cattle marketed by feedyards also climbed beyond analyst expectations.

Futures prices received some support from a round of cattle buying among meatpackers Thursday afternoon, who paid prices ranging from $1.14 to $1.16 a pound for animals across Texas, Kansas, Nebraska and Colorado. Those prices came in well above the average $1.1268 a pound paid by buyers of about 2,900 animals in an online auction Wednesday.

Major U.S. stock indexes managed to post tiny gains in a quiet day of pre-holiday trading.   The Dow Jones industrial average rose 14 points, or 0.1 percent, to 19,933.   The Standard & Poor’s 500 index gained 2 points, or 0.1 percent, to 2,263. The Nasdaq composite climbed 15 points, or 0.3 percent, to 5,462.   Bond prices rose. The yield on the 10-year Treasury note fell to 2.54 percent.   Markets will be closed Monday in observance of Christmas.

 


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