However, the first major snow storm of the season also had a notable impact, especially on corn prices which managed to close slightly higher on the day, no small feat given the pullback in beans, meal, wheat and soy oil contracts. Cattle and hog futures also were pressured lower, again partly reflecting the impact of outside markets but also due to more fundamental problems.

In the case of live cattle, markets remain concerned about the demand outlook into the holiday season and beyond. The choice cutout was down 53 cents from the day before and at the lowest point since 16 October. The select cutout also lost $1.39 compared to the previous day, an indication that retail demand also is problematic at this time. Lean hog prices also pulled back sharply, the only exception being the nearby December contract.

In the short term, strong seasonal demand for hams and prospects of plant closures due to weather are supportive of the hog market. But, hogs currently in barns will eventually have to come to market, making for nervous trading for Q1 deliveries. The jury is still out on whether the current rally in hogs is more a reflection of short term seasonal factors or whether it represents a shift in domestic and/or export demand.

The corn market continues to struggle with conflicting factors. Export sales are running well behind projections and a number of market participants expect USDA to lower corn export projections. However, the reduction in exports will likely be offset by some field loses given the slow pace of harvest this year and the fact that a significant number of acres remained unharvested on the eve of the most recent snow storm, which is expected to cover much of the Midwest, with some areas getting as much as 16 inches. The chart above shows the 24 hour snow precipitation through 6 AM 12/8, with a lot more snow following that in many areas.

The latest USDA crop progress report showed that 88 per cent of the corn crop in the 18 state area had been harvested, implying that corn on almost 10 million acres still remained on the field. The table above may be a bit hard to read so we have reproduced it on page 2 of the link below, together with the latest harvest tracking chart. It is difficult to know what the field losses on these acres will be, especially since some of this corn may not be harvested until March. USDA will release on Thursday morning its latest supply and demand estimates and analysts polled by Dow Jones showed corn ending stocks in range of 1.5 billion - 1.725 billion bu., the average being 1.646 billion bu., only slightly higher than the November estimate.

Further Reading

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You can view the full report by clicking here.