Broad financial market weakness depressed ag markets Thursday

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The ag markets, including corn, fell in reaction to demand concerns Thursday. That is, talk that the Fed will slow its buying of U.S. financial instruments depressed the equity markets and boosted the U.S. dollar. Conversely, the latest Chinese data suggests disappointing economic weakness in that country. All these developments seem negative for commodity demand. Thus, corn futures were weak, with moderated talk of hot, dry weather looming in late June and early July also undercutting recent gains. July corn dropped 9.0 cents to $6.73/bushel at the Thursday close, while December tumbled 10.0 cents to $5.605.

Despite ongoing weather concerns, the soy complex also reacted badly to the financial markets. With the latest forecasts seeming less threatening than those seen Wednesday, concerns about a reduced 2013 crop are less keen. Moreover, the soybean, oil and meal markets are also quite susceptible to diminished demand if future economic conditions, especially those in China, prove less favorable. July soybean futures dove 25.5 cents to $14.975/bushel as pit trading ended Thursday, while July soyoil plunged 0.95 cents to 48.40 cents/pound, and July soymeal sank $8.0 to $445.6/ton.

Wheat futures also suffered amidst the wide commodity breakdown posted Thursday. Ultimately, broader demand issues can undercut markets badly. However, the golden grain markets held up surprisingly well in the face of the general decline. The midsession firmness at least partially reflected renewed concerns about the U.S. winter wheat crop, as well as the limited size of potential spring wheat production in the absence of favorable summer weather. Bulls also cited persistent hopes for short-term Chinese buying. July CBOT wheat closed 6.5 cents lower at $7.005/bushel Thursday afternoon, while July KCBT wheat dipped 2.75 cents to $7.37, and July MGE futures inched up 0.5 cent to $8.14.

Slumping financial markets also weighed upon cattle futures Thursday. As with so many commodities, the potential combination of U.S. dollar strength and reduced economic growth in the U.S. and overseas typically translates into diminished demand on both the domestic and international fronts. When combined with the seasonal weakness experienced lately, it was hardly surprising to see cattle futures suffer as well. August cattle settled 0.40 cents lower at 120.00 cents/pound Thursday afternoon, while December skidded 0.35 cents to 125.92. August feeder cattle futures tumbled 0.22 cents to 144.42 cents/pound and November slumped 0.20 to 150.15.

 

Hog futures held up rather well to the broad commodity drop experienced Thursday. That is, extreme seasonal strength in both the cash and wholesale sectors, as well as considerable upward momentum in Chicago prices, boosted the CME swine contracts Thursday. Talk of the damage being done by PEDV disease may also have supported swine values despite the financial market decline. July hog futures rose 0.27 cents to 100.25 at their Thursday settlement, while December slid 0.15 cents to 82.25.



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