Crop markets reacted poorly to weather and currency shifts

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Corn futures dropped sharply Thursday morning. The drop was somewhat surprising since the equity markets were making new highs, but concurrent U.S. dollar gains seemed to weigh upon commodities. That seemed to exaggerate the bearish impact of near-perfect summer weather. September corn futures fell 11.5 cents to $4.875/bushel just before midday Thursday, while December dove 13.75 cents to $4.6525.

The soy complex was decidedly mixed in early Thursday trading. The expiring August bean contract apparently firmed in response to old crop supply tightness this morning, whereas the same weather and currency developments that were depressing the grains weighed upon new crop beans and meal. Conversely, rebounding palm oil prices rather obviously boosted oil values as well. September soybean futures tumbled 13.5 cents to $12.3625/bushel in Thursday morning trading, while November beans plunged 12.5 cents to $11.9375. September soyoil climbed 0.36 cents to 42.63 cents/pound, while September soymeal sagged $4.2 to $399.8/ton.

Wheat futures followed the corn market downward Thursday. The surging U.S. dollar probably played a role in the wheat slid as well. The weekly Export Sales report seemed neutral, but we have to wonder if a morning report from the World Grain Council undercut prices. That is, the WGC boosted its global production estimate and raised its forecast of Chinese imports less than predicted by others (such as the USDA). September CBOT wheat dropped 12.75 cents to $6.5175/bushel by late Thursday trading, and September KCBT wheat sank 7.25 cents to $6.995, while September MGE futures edged 1.75 cents lower to $7.395.

Live cattle futures declined in early Thursday trading. Despite general expectations for cash and wholesale strength during the coming weeks and months, recent events make traders wonder if the premiums already built into Chicago prices have already incorporated the rise. Overnight U.S. dollar strength and Wednesday beef losses weren’t encouraging either. October cattle stumbled 0.60 cents lower to 124.87 cents/pound around midsession Thursday, while December tanked by 0.50 cents to 127.87. September feeder futures bounced 0.92 cents to 157.90 cents/pound, and November advanced 0.30 cents to 160.35.

Hog futures bucked the downward trend Thursday morning. In contrast to the cattle losses, discounts built into deferred hog futures seemingly leave them room to rally even when current conditions don’t seem particularly bullish. Still, late morning news of cash and wholesale weakness may undercut prices in afternoon trading. October hog futures climbed 0.52 cents to 83.85 cents/pound in Thursday morning action, while December lifted 0.35 cents to 80.85.



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