CBOT futures closed sharply lower lead by soybean and soybean meal futures which continue to react to Friday’s USDA Crop Production report that increased 2012 US soybean production by 111 million bushels, or 80 million more than the average trade guess.  The selling turned the corn and soybean charts negative and this magnified the technical selling and long liquidation by the speculative funds.  Soybean oil futures weren’t down as much because the funds are already short soy oil in a big way.

  Corn futures were resistant to the sell-off early today, but gave in as soybean losses magnified.  Spec Funds hold large long positions in corn futures so there’s plenty of risk of long liquidation here. 

  Generally speaking, the spec funds will drive prices higher and lower than fundamentals warrant.  Producers and end-users attempt to take advantage of this added price range and volatility.

  Traders will watch South American weather closely for impacts to planting of corn and soybeans.

  Wheat futures also were pressured by Friday’s bearish USDA reports that increased ending stocks estimates.  December Wheat has not broken key support yet.  The weekly continuation CBOT Wheat chart has critical support at $8.38 – the bottom of a descending triangle formation. KC December Wheat needs to stay above $8.49 to avoid a breakdown.

  U.S. crop progress ratings will be released on Tuesday.

  Live Cattle futures closed mostly lower as cash trade last week was down $1-2/cwt to $124-126.  That puts December Live Cattle in line with the cash market. Deferred feeder futures benefitted from the weaker CBOT.

  Lacking any bullish cash market news, Lean Hog futures closed lower.  This isn’t unexpected given last week’s rally to new highs in the December contract.   If CBOT futures continue lower, it will pressure deferred hog futures.

  Financial markets will be listening for progress on the U.S. “fiscal cliff”.  Europe’s problems have not gone away either and can impact U.S. markets at any time.

Corn Dec -21 718; Mar -20 722; Dec’13 -17.5 612

Bean Jan -46 1405; Mar -48.5 1388; Nov’13 -34 1286   Meal Dec -18 431; May -18 407    OIL -38 4739

Wheat Dec -29 858; Jly -28 860   KC -32 890; MGE -26 924

LC Dec -40 12535; Feb unch 12935; Jun -15 12925

FC Nov -20 14400; Jan +35 14595; Apr +50 15030

LH Dec -42 8032; Feb -5 8627; Jun -32 9970

Milk Nov +2 2080; Dec -29 1920

Oats -4 359

Rice -31 1491 

US$ steady

Dow unch 12815

SP unch 1380

NAS -1 2904

Tran +40 5058

VIX -1.93 16.68 (10.4%)

WTI -50 8557

Brent -69 10871

Gas -3 267

NG +7 357

HO -1 300

Eth -5.4 232.7

Gold -3 1728

Slvr -21 3239

 No trading in U.S. Treasuries today.