Cyprus debt deal weighs on grain, livestock markets

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Commodity markets declined early Monday morning in response to investor concerns about the global financial situation. A proposed deal to alleviate the economic crisis in Cyprus (which has been caught up in the Greek situation) includes a direct levy upon the savings accounts of Cypriot citizens. Investors worry about the precedent this would set for governments everywhere, so they are apparently reducing their holdings in global financial and commodity markets. However, corn futures ended the day slightly higher on surprisingly good export inspection numbers. May corn rose 3.0 cents to $720.0/bushel at its Monday afternoon close, while December gained 0.25 cent to $5.62.

The idea that governments and institutions could directly tap consumer accounts with financial institutions, as implied by the proposed Cyprus bailout deal, sent the financial markets lower Monday morning. The equity markets led the way downward, with most commodities following. Soybean futures certainly were not immune to the pressure, despite news that frost may have diminished the yield potential of some Argentine bean fields over the weekend. Talk of diminished demand did not help the situation. May soybeans sank 16.5 cents to $14.095/bushel at its settlement Tuesday afternoon, while May soyoil skidded 0.23 cents to 49.68 cents/pound, while May meal slumped $5.5 to $413.3/ton.

Wheat futures also declined in reaction to the uncertainty created by the proposal to directly levy Cypriot consumer savings accounts Monday morning. Wire service sources also cited the improved precipitation received by larger areas of the Southern Plains lately, as well as a recent forecast for large global wheat production this year. May CBOT wheat futures dropped 10.25 cents to $7.1275/bushel as trading wound down Monday, while May KCBT wheat lost 8.0 cents to $7.4425, and May MGE futures slid 7.5 cents to $7.8875.

Cattle futures also reacted poorly to talk of governments directly accessing consumer accounts for funds (as implied by the proposed Cyprus debt deal) Monday morning. However, most contracts bounced from early lows, possibly due to traders hopes for seasonal cash strength. The fact that market-ready cattle supplies are probably at their annual lows may have boosted the market as well, especially if grocers buy beef aggressively as they gear up for grilling season. April cattle rose 0.27 cents to 126.05 cents/pound at its Monday close, while August gained 0.05 cents to 122.57. Meanwhile, April feeder cattle climbed 0.30 cents to 139.40 cents/pound, and August edged 0.20 cents higher to 148.22.

Hog futures dropped as expected in concert with the other financial and commodity markets in reaction to the Cyprus bailout proposal. The general financial market decline apparently caused swine traders to forget the big Friday afternoon surge in pork cutout values, as well as talk that cash prices were firming Monday. April hogs lost 0.27 cents to 79.40 cents/pound late Monday afternoon, while June dipped 0.37 cents to 88.80.



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