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US Agriculture After the Closing Bell Report

Severe drought that slashed US Corn and Soybean crops continue into the Winter, hurting Wheat fields in Plains states and carrying implications for global food prices next year, according to the Economist Intelligence Unit.

Food prices already increased strongly as the drought withered crops across the central US, raising costs for livestock feeders, bread makers and others who rely on grains as raw ingredients. Crop shortfalls in the US led to shrinking supplies globally, with stockpiles of Corn are estimated at the lowest in 7 yrs.

Given the size of US grains and Soybean production, there will always be global ramifications if crops are markedly lower, but in Y 2012, the problem was compounded by less-than-ideal growing conditions in some other major producers and exporters, including Australia, Russia and the European Union, the report said

Wheat futures softened with the start of open-outcry trade to finish mostly 6 cents lower in Chicago and Minneapolis, with Kansas City down 6.25 to 8.25cents. Due to a lack of fresh demand news, Wheat was influenced by weakness in the Corn market as it works to find a price that attracts demand.

Corn futures softened with the start of open-outcry trade and ended near session lows with losses of 5.25 to 6.75 cents. Early short-covering which supported corn futures through the overnight and early morning hours dried up once pit trading started and focus shifted back to sluggish demand.

Soybean futures softened with the start of open-outcry trade after seeing gains overnight. Futures ended near session lows, with January up 0.25 cent. March through August futures ended 0.25 to 4.25 cents lower, with far-deferreds steady to around a penny higher. Soybean futures saw profit-taking set in with the start of pit trade Monday, but pressure was limited by ongoing strong demand.

Nearby lean Hog futures extended losses into the close, with the February through July contracts ending 37.50 to 65 cents lower. Far-deferred futures saw lighter losses. Due to concerns about some packers’ profit margins slipping back into the red, traders focused on narrowing the premium nearby contracts hold to the cash index.

December live Cattle futures closed 2.10 higher, while deferred months advanced 70 to 90 cents. Contracts closed on or near session highs. Live Cattle futures got much of their support from technical-based buying following a gap-higher open in nearby contracts. Fundamental support came from weather as the 1st Winter storm of the season is forecast to move into the country’s midsection mid-week.