Corn futures are sharply lower in midsession trade. Outside markets are negative. The DJIA, crude oil and gold prices area all down sharply and the dollar is up sharply. Overnight news on the global economy is the overwhelming driver today. Interest rates for Spain, a basket-case economy much larger than Greece and too big for the EU to bail out, hit record highs again, raising grave fears of national default. It’s so alarming now that even demand for German bonds, the strongest economy in the EU, was muted. In fact, there were no takers at all for about 30% of the German bonds offered. And ahead of the holiday break, few want to carry any risk in commodities. December is currently down 12 at $5.87; March down 12 at $5.93 ¾.
Soybean futures are sharply lower in midsession trade, part of the broad selloff across the board in commodities today due to the rising dollar which hurts export demand for U.S. goods in general. The pessimism about the European financial crisis is a driving force, of course, but there is particular concern about sagging export demand for soybeans. That’s because China is the big dog among U.S. export markets in beans and overnight there were reports that Chinese manufacturing shrank to the lowest level in 32 months this month. China is considered the engine for global economic recovery and now even that engine is sputtering. November is down 15 at $11.37; March down 16 at $11.65.
Wheat futures are also lower in midsession trade, with double digit losses at all three exchanges. Once again Minneapolis futures are down the most on continued unwinding of short Chicago/long Minneapolis spreads. Fierce and relentless competition for exports from the Black Sea region and Australia is keeping U.S. wheat “overpriced” in export markets despite the sharp decline in our own prices the past two weeks. And with the Congressional Super-Committee now a super-FAILURE, there’s increasing worry about the U.S. economic outlook as well. Currently, CBOT December is down 12 at $5.82; KCBT December down 11 at $6.50 and MGE December down 14 at $8.46.
Cattle futures are narrowly mixed in midsession trade on pre-holiday position squaring by traders. Considering the gloom and doom in the grains, slightly lower isn’t bad for cattle! Since key chart support held recently despite a demand outlook that’s “murky” at best, the facts remain that futures are still at a discount to cash cattle and packer losses are finally shrinking. The biggest threat is to cash market bids is that on the slightest drop in retail demand, packers could back off bids suddenly. The packer margin index is still negative by $25 per head, just much better than a week ago when packers were losing nearly $88 per head! At midsession, December cattle are up 10 at $121.55; February unchanged at $123.30 and later contracts all down slightly.
Lean hog futures defied high cash hog bids and are trading slightly lower in midsession trade. Nationally, cash hog bids are 73 cents per cwt higher after evidence yesterday that recent declines in cash bids may have bottomed out. Hogs are looking stronger on the charts, with a clear pattern of higher highs and higher lows after breaking the downtrend from mid-October highs last Thursday. Exports are firm and there’s talk China may need to keep importing aggressively to control inflation in pork prices in that country that are causing social unrest with pork the staple meat for Chinese. At midsession December hogs are down 37 at $87.45 and February hogs are down 15 at $90.95.
Cotton futures are sharply mixed in midsession trade. Futures have dropped so sharply so far this week that the nearby December contract is up a bit on pre-holiday profit-taking by short traders. But deferred cotton futures vary from sharply lower to sharply higher in thin trade. The bearish news overnight about the Chinese economy slowing is feeding pessimism about demand into 2012. The chart damage is severe and the trend clearly lower. At midsession, December futures are up 5 cents per cwt. at $90, while March is down 64 cents to $90.48 and the October contract up $1.05 at $93.13.