Pro Farmer Senior Markets Editor
From Pro Farmer
Updated as of 7:00 a.m. CT
Government makes it official... According
to the National Bureau of Economic Research (NBER), the U.S. has been in a recession
since December 2007. The "official" declaration was made yesterday,
although it just confirms what most had already believed was the state of the
The NBER said the deterioration in the labor market throughout 2008 was
one of the key factors, as well as a decline in real personal income, industrial
production and wholesale and retail sales. Many people believe a recession
is defined by two consecutive quarters of declining economic activity, but
NBER says that has yet to take place in this recession. The NBER defines a
recession as "a significant decline in economic activity spread across
the economy, lasting more than a few months, normally visible in production,
employment, real income, and other indicators."
The last two recessions (1990-1991 and 2001) lasted eight months, and
only two of the 10 previous post-Depression recessions lasted a whole year,
states NBER. How long will this recession linger? That's a tougher question
to answer, but economists yesterday afternoon didn't paint a very optimistic
picture we would be out of it in less than a year. The stock market was under
sharp pressure yesterday, but is set to post a slight recovery today.
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Opening calls. These calls originate
more than three hours before the open -- use caution, things change:
Corn: Narrowly mixed. Futures were narrowly mixed overnight, with
nearbys slightly firmer. Futures closed sharply lower yesterday, pressured
by outside markets. March corn gapped lower on the open and extended losses
to post a fresh contract low. Futures violated support at the November low,
which points the market even lower.
Soybeans: 3 to 5 cents higher. Futures were slightly higher overnight
amid short-covering. Futures closed sharply lower yesterday on pressure from
outside markets. January soybean futures moved to the bottom of the extended
consolidation range, but respected double-bottom support at $8.38. If this
support is violated, it could trigger an active wave of selling.
Wheat: 4 to 6 cents higher. Futures were firmer overnight
amid short-covering. Futures were sharply lower yesterday, pressured by outside
markets. March Chicago wheat futures are hovering just above the bottom of
the extended consolidation range. Support at the bottom of the range is at
$5.16. A drop through that level would open the door for the contract to move
another leg lower.
Cash cattle expectations: Sluggish
start for beef. Boxed beef prices firmed 18 to 27 cents Monday, but movement
was only 143 loads for the day. That's not the type of performance bulls were
hoping for coming out of Thanksgiving weekend. While feedlot numbers are tightening,
beef movement must be strong to support higher cash cattle prices, especially
if cattle futures weaken.
Futures call: Mixed. Futures are called to open mixed based on the possibility of short-covering. Concerns the stock market will
be forced to absorb more negative economic data in the coming weeks has
traders concerned upside potential in cattle futures will be limited to
short-covering. Traders feel very comfortable (for the time being) with
futures at a big discount to the cash market.
Cash hog expectations: Steady to
firmer. Packers are still in need of slaughter supplies for the week, which
should keep cash hog bids steady to firmer across the Midwest today. In addition,
the average pork cutout value was up 95 cents Monday and packer cutting margins
remain solidly in the black, which gives packers incentive to raise cash hog
Futures call: Mixed. Futures are called mixed following yesterday's
decline, on thoughts of short-covering. But if the stock market continues
to weaken, it will be difficult for the hog market to generate very much upside
potential. February lean hog futures dipped below resistance-turned-support
at $65.35, but closed right on that level. A close below $65.35 would signal
a short-term top and would point to at least a multiple-day pullback.