We look for butter futures to open mixed.
While the collapse in the U.S. dollar following the Fed’s meeting and Bernanke’s first-ever news conference drove almost every commodity sky high (silver was up almost $3!), grains sold off strongly, as they had already been under severe pressure prior to any Bernanke news. Old crop corn fell 13.5-14 cents while new crop was off 8.50 cents. Soybeans fell 4.75-6.25 cents, and wheat fell 34.25 to 35 cents. Many observers are calling the sell-off weather related due to pockets of dryness that should help producers increase the pace of plantings.
One outside factor we would like to point out is the potential cotton impact on commodity prices. It was cotton prices that lead the commodity bull charge beginning last July. Market leaders in one direction usually signal the turn as well. Cotton prices peaked recently at just shy of 2.15, they have suddenly plunged lower to 1.48. This could herald a dip for the broader markets as cotton led the move up and it might very well lead the move down. Thus there is a case to be made to make sure and buy puts under any forward-contracted corn.
We look for corn to open 3 to 5 higher, beans to open 9 to 12 higher, meal to open 4 to 5 higher and for wheat to open 2 to 3 higher.
Daily CME spot market prices:
Block Cheese $1.6050 (Up 1/4)
Barrel Cheese $1.6100 (Up 3 1/2)
Butter $2.0150 (Up 1 1/4)
Grade A NFDM: $1.6100 (no change)
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